India and Brazil GDP: More Emerging Economies Falter

Brazil is the world’s sixth-largest nation based on nominal GDP, according to the International Monetary Fund, at $2.5 trillion. India ranks 11th at $1.7 trillion. Both are dwarfed by China’s $7.1 trillion. Combined, their GDPs are three times that of Germany.

The economies of the established parts of the world already have begun a new period of contraction, at best, or recession. Japan, Germany and the United States are the exceptions, though among them GDP growth probably will not be better than 2.5% this year. That leaves very little room for the exports from the developing world to the developed one. So these nations will need to fall back on consumer spending within their own borders.

That consumer spending almost certainly will drop from the levels of the past several years. None is immune from the regular economic cycles. GDP growth slows. Job growth seizes up, and with it wage improvement. Anxiety then creeps into the consumer sector. So the positive effect of the consumer on GDP weakens.

China, India and Brazil will need to rely on new stimulus measures to revive, or hold steady, their historically rapid growth. As a group, their expansion over the past decade is unprecedented. So is the extent to which these economies, and those emerging economies slightly smaller — like Indonesia — have added to global GDP expansion.

The drop in growth in China, India and Brazil can be blamed on Europe. It is harder to blame the U.S. because American GDP has begun a modest expansion since the end of the recession. Whatever the exact reason, the emerging nations that have been an engine of global growth are not growing as much any more.

Douglas A. McIntyre