The first answer is population. Consider these charts of total population:
The combined total of the Chinese and Indian population is about 2.5 billion. That comprises about 37% of the world's 6.8 billion population -- a very significant number. More importantly, that number is 66% of the population of the 10 largest economies in the world.
In addition, from a purchasing power parity perspective, China is the third largest and India is the fourth largest economy in the world.
A slowdown that effects this many people is bound to hurt. And, most importantly, there are no countries of comparable size to take the reins.
3 comments:
Isn't it "take the reins?" I will admit that "take the reigns" might apply in the case of anticipating China's assuming global economic dominance at some point in the next twenty years, but India is unlikely to gain that honor for a while yet.
What really matters is just how much the BRICs import from the developed world, particularly as a percentage of their overall GDPs. We can have a nation of 2 billion people see its economy come to a screeching drop of 20% and not see any effect on the global markets if it imports nothing or very, very little, even if its own economy is built on an export-driven model. It also matters whether the BRICs continue to import demand sensitive capital goods or less responsive items like food and energy.
The combined total of the Chinese and Indian population is about 2.5 BILLION.
Spellcheck (and maybe more coffee) before you post, please.
That's the point I've been making here for months ! I'm glad to see that my opinion is taken in account.
Would you have transposed the tools you're using to analyze future growth/recession for the US to these economies, you would have noticed the huge recession warning signals a little earlier. The four BRICs had a very restrictive monetary and fiscal policy and clearly wanted a recession, the Eurozone is out of the growth as is Japan. The US are the only possible source of growth and they can not take the reins for everyone else like they used for the past 50 years.
It's an entirely new ballgame and the main question is how much will these countries be able to affect the US. My answer, as loyal readers might have noticed, is that the US will also have a recession.
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