BRICS to build a powerful bloc
Gulf News 29th March 2012
Quoted: Dr Martyn Davies, Chief Executive Officer – Frontier Advisory (Pty) Ltd.
Africa Frontiers Forum
Dubai As the second Brics (Brazil, Russia, India, China and South Africa) summit gets under way in New Delhi today, the five-nation bloc has set the ball rolling on a pact that could result in seamless flow of cross-country credit in local currencies of member nations and creation of a common development bank.The theme of the fourth Brics Summit is ‘Partnership for Stability, Security and Growth'. "There is a large untapped growth potential of intra-Brics trade and investments which we are presently focusing on for exploitation," India's Commerce and Industry Minister Anand Sharma said ahead of the summit.At present, intra-regional trade of Brics stands at $230 billion (Dh844.61 billion).
The agenda of the New Delhi summit includes setting up of a common development bank that can offer cross-country credit in local currencies of the member countries. The Chinese Academy of Social Sciences yesterday pushed for setting up the common development bank.Experts say a joint bank will be very useful, particularly to Africa, but could face major challenges in aligning different economic priorities of the member countries. "The point of Brics bank is a very noble venture. It will be very beneficial, particularly to sub-Saharan Africa," said Martyn Davies, CEO of the market research firm Frontier Advisory.
State Bank of India's (SBI) Africa head Mathai Vaidyan said the idea is good, but it will be very difficult to arrive at a consensus on risk management and aligning the respective interest of the member countries.International observers said it is a new opportunity for the group members. "Brics has created a platform for South Africa to share best practice and knowledge in mutually beneficially areas such as finance and infrastructure which have resulted in significant bilateral trade investment opportunities," said Yacoub Abba Omar, South African Ambassador to the UAE.Ahead of the Summit, the Brics trade ministers who began their meeting in New Delhi yesterday said there is a large untapped growth potential of intra-Brics trade and investments, at a time when demand slowdown in the West is hurting export and growth.
China has cut its econ-omic growth forecast to 7.5 per cent from 8 per cent earlier. India's economy is expected to grow by 6.9 per cent in the current fiscal.
"The real challenges for the New Delhi summit are issues that are linked not only with the future of Brics but also with the conduct and approach of its members towards each other," said Jagannath Panda, a Carole Weinstein programme visiting faculty at the Department of Political Science, University of Richmond.Until recently, Bric, the acronym coined by Goldman Sachs economist Jim O'Neill in 2001 had only four members. Last year South Africa joined the group and Brics evolved at the Sanya Summit in China. According to the IMF the group together accounts for 40 per cent of the world's population, with more than 25 per cent of the global GDP and is forecast to be the biggest economic bloc by the middle of this century.
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