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,

BRIC: Long Run Growth, (CEPII projections )

BRIC: Average Saving Rates, (CEPII projections )

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

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

BRIC: GDP growth, (IMF forecast )