The economies of Brazil, Russia, India, China and South Africa are regarded as “emerging” economies and are set to take seats at the top table of global economic power shortly; indeed, China has already overtaken Japan to become the world’s second largest economy. Collectively known as the BRICS, these economies are looked to to spur economic growth for the world in coming years.
Russia has seen a sharp year-on-year decline in its growth figures for Q1 with the Q1 2013 data suggesting growth of 1.1% compared to a vigorous 4.9% for Q1 2012. The Russian authorities downgraded their full year growth forecast for 2013 from 3.6% to 2.4% last week on the basis of weaker industrial output and falling consumer demand. The Russian economic minister, Andrei Belusov cautioned that the nation might experience economic contraction in the course of the year, noting “we are not in recession yet, but we could end up there”.
Russia is the world’s second largest producer of oil and gas and these products contribute to 60% of the nation’s total exports. Receipts have been hit by falling commodity prices – benchmark Brent crude has seen the price decline from $111.3 at the start of the year to $97.7 at last night’s close.
Russia’s Prime Minister (and former President) Dimitri Medvedev suggested that Russia’s current economic difficulties were more to do with weak economies in her trading partners than fundamental problems at home. This position was not entirely endorsed by Neil Shearing of Capital Economics in an interview with the BBC: "We expect growth in Russia to stay extremely sluggish in 2013-14 and our forecasts remain well below consensus. But this is largely due to structural factors that have caused trend growth to slow, rather than to the effect of lower oil prices."
Other members of the BRICS group have also seen their growth levels drop back, largely in response to sluggish global demand.