By Gideon Rachman
In 1996 a friend of mine called Jim Rohwer published a book called Asia Rising. A few months later, Asia crashed. The financial crisis of 1997 made my colleague’s book look foolish. I thought of Jim Rohwer (who died prematurely in 2001) last week as a I listened to another Jim – Jim O’Neill, formerly of Goldman Sachs – defending his bullish views on emerging markets in a radio interview.
It’s no secret that the US is at the centre of global trade. But how is what it trades with the world changing? The US International Trade Commission, the independent government agency which investigates anti-dumping cases in the US and also acts as a trade data clearinghouse, this week put out its annual “Shifts in US Merchandise” report. Here’s four things in the report worth thinking about:
1. Americans love their cars and their iPhones. They were the biggest contributors to the $10bn widening of the US trade deficit in 2012. Read more
Currency jitters in India and emerging markets
India was once seen as a rising superpower and one of the world’s most dynamic economies, but now its rupee is plunging and the economy is stalling. What’s more, this seems to be part of a broader problem in emerging markets, as Indonesia, Turkey, South Africa and Brazil all experience currency jitters. Gideon Rachman is joined by Victor Mallet, New Delhi bureau chief and Ralph Atkins, capital markets editor, to discuss what’s going on and how deep the problems are.
By Catherine Contiguglia
♦ Emerging market currencies are sliding as the beginning of the end looms for the US Federal Reserve’s ultra-loose monetary policy, and economic growth continues to stagnate while current account deficits grow. India’s rupee is leading the drop after a clumsy policy response spooked investors. Though policy makers are now focused on reducing the current account deficit and foreign currency reserves are much stronger than they were before the 1991 balance of payments crisis, the size of India’s economy means any downturn could have a significant impact on the global economy.
♦ Saudi Arabia is backing Egypt’s military rulers with oil money and diplomatic might and that could well undercut US and European efforts to apply pressure by cutting aid to Cairo following the bloody crackdown by Egyptian security forces on Islamist supporters of deposed president Mohamed Morsi.
♦ “It may not be long before it will be impossible for journalists to have confidential sources,” writes the Guardian editor Alan Rusbridger, reflecting on the recent detainment of a reporter’s partner in connection with the paper’s publication of information from US National Security Agency whistleblower Edward Snowden.
♦ A detail not often noted about Turkey’s Gezi protests is that many of the frontline protesters have been women, whose situation has lagged far behind international standards on almost every measure in the ten years Prime Minister Recep Tayppid Erdogan has been in office.
♦ The economic gap between blacks and whites in the United States has not budged for 50 years, the Washington Post points out in a set of charts that show how “yawning” disparities have persisted since 1963.” Read more
Activists of the Indian right-wing Hindu organisation Shiv Sena burn a Chinese flag in protest against troops moving into Indian-controlled territory on April 25 (NARINDER NANU/AFP/Getty Images)
Rising tensions with Japan are evidently not enough to keep China busy. The People’s Liberation Army has now also pitched tents in a bit of disputed territory, controlled by India, creating an embarrassing security dilemma for the Delhi government. Official India’s initial reaction has been to play the incident down. I encountered an Indian diplomat in Beijing last week, who speculated that the whole thing was probably an initiative by an over-zealous local Chinese commander – and assured me that it would all be smoothed over. But that was five days ago, now – and the Chinese are still there.
As a result, the Indian government is increasingly open to charges of weakness – or even appeasement. Brahma Chellaney, one of India’s most hawkish commentators, fumes that “China is encroaching little by little on Indian land” and accuses the government of Manmohan Singh of “bending over backward at a time of aggression”. Read more
What next for the Brics?
The Brics started life as a marketing gimmick dreamt up by Goldman Sachs to promote emerging markets, but the notion has taken on a life of its own and this group of nations – Brazil, Russia, India, China and South Africa – are now a formal organisation who have just met for their fifth summit. In this week’s podcast, Gideon Rachman is joined by Stefan Wagstyl, editor of beyondbrics, and Andrew England, South Africa correspondent, reporting from Durban, where the group has agreed to set up a Brics-led development bank. But do the Brics matter, what unites and divides these nations, and are we likely to still be discussing this group in ten years’ time?
By Gideon Rachman
Over the past three years, conventional wisdom divided the world’s major economies into two basic groups – the Brics and the sicks. The US and the EU were sick – struggling with high unemployment, low growth and frightening debts. By contrast the Brics (Brazil, Russia, India, China and, by some reckonings, South Africa) were much more dynamic. Investors, businessmen and western politicians made regular pilgrimages there, to gaze at the future.
By Gideon Rachman
The highway leading out of Delhi is lined with adverts for new housing developments with names such as “Exotica Dreamville”. A typical hoarding shows a smiling young couple, standing on a manicured lawn, under the slogan: “Lifestyle is here.”
There is no shortage of dramatic news this week – what with a disappearing Chinese leader, a murdered ambassador in Benghazi, riots in Cairo and protests in Madrid and Moscow. But I wonder whether less obviously world-shaking events in India may end up having a greater historical significance.
Admittedly, I am biased since I’ve just spent the last week in Delhi. (In fact, I’m still here.) But the economic future of a country of 1.2bn people – about a sixth of mankind – will shape this century. And reforms announced this week by the much-abused government of Manmohan Singh, give some hope that India may be about to rediscover its mojo. Read more