The China Analyst

Brazil, India, Indonesia and China going strong; Russia and South Africa still lagging behind

• With the economy of Brazil showing signs of slowing after expanding in 2010 at its fastest pace in 24 years, President Dilma Rousseff must manage expectations in the years ahead as Brazil tries to break through bottlenecks and upgrade its infrastructure ahead of the 2014 World Cup and 2016 Olympic Games
• The economy of Russia grew less than expected in H1 2011 (even amid high oil prices) due to the effects of more than USD 30 bn in capital flight, largely attributed to uncertainties surrounding the upcoming 2012 presidential elections
• Exports from India have been steadily growing and are on course to reach the government's target of USD 300 bn for the current fiscal year, driven by increased government support to exporters to tap into new markets in Latin America and Africa. However, local reforms aimed at empowering Indian industries to become more competitive over the long term along with monetary tightening measures are threatening to slow growth moving forward
• The GDP of Indonesia is projected to grow nearly 7% in 2011, driven by soaring domestic consumption, global demand for Indonesian coal, tin, copper, and palm oil, increased FDI and a sound macroeconomic policy. Yet gold-driven inflation is starting to spread through the economy
• In China, the economy grew by 9.6% y-o-y during H1 2011 as China seeks to become less reliant on the economies of the US and Europe and diversify its export markets. Consumer inflation, especially for food, remains the most pressing concern, and policymakers are increasingly willing to use the renminbi's continued appreciation against the US dollar as an inflation fighting tool, a move which also pushes Chinese manufacturers to move up the value chain and encourages domestic consumption
• Economic growth in South Africa slowed sharply in Q2 2011 to 1.3% from 4.5% in Q1, which can be largely attributed to the ongoing sovereign debt crisis in Europe and an overall weakened global economic outlook. With an unemployment rate hovering above 25% of the labour force, South Africa might lower interest rates to regain recovery momentum, fuel investment and increase exports from its contracting manufacturing sector