BRICS Economic Research Forum

Conference

Eustáquio J. Reis IPEA, Brazil

New Delhi, February 2012

Forum Agenda

• Coping with the vagaries of capital flows– Global savings to finance infrastructure

• Monetary policy coordination• Economic prospects for developed

economies– Impacts on BRICS– Policy coordination possibilities

Outline

• Economic prospect for developed economies • Implications for BRICS• Possibilities of policy coordination– Fiscal – Trade – Finance

• Long run perspectives

Economic Prospects for Developed Economies

• Growth slowdown in the aftermath of weak recovery with significant risks of another major downturn– Sovereign debt crisis in Europe• Fiscal tightening• Increased sovereign spread• Consumer and business confidence• Domino effect (PIGIS)

– Japan earth quake– Iran conflict

IMF-Jan2012: Baseline Scenario

DESA-WESP: Baseline Scenario

DESA-WESP: Donwside Scenario

Implications for BRICS

• Trade shocks expeced to be mild – Trade volumes moderate positive growth– Corrections in commodity prices surges last two

years• Financial volatility – Speculative flows and exchange overvaluation– Reserve accumulation: costs and benefits– Capital flow regulation and restrictions

effectiveness?

Policy coordination

• Fiscal space• Monetary restriction• Brilateral agreements and regional trade

arrengements• Financing infrastructure• International financial reforms– Multiple currencies– Global currency

Long Run Prospects

• Geography, culture, language• Size– Population and GDP– Regional leadership

• Share of he “region”• Second partner

• Staregic arms control • Long run– Investment rate– Schooling

BRIC: Population, 1980-2050

BRIC: Long Run Growth, 1980-2050(CEPII projections 2011-2050)

BRIC: Average Saving Rates, 1980-2050(CEPII projections 2011-2050)

BRIC: GDP per capita, 1980-2050(CEPII projections; WB PPP US$ 1985)

BRIC: Avg Yrs of Schooling,1980-2050(CEPII projections; WB PPP US$ 1985)

BRIC: GDP growth, 2008-2013(IMF forecast 2012-13)