EMERGING markets have been through a lot over the past four years. The “taper tantrum” in 2013 (prompted by fears of a change in American monetary policy); the oil-price drop in 2014; China’s botched devaluation of its currency in 2015; and India’s botched “demonetisation” of much of its own currency in late 2016 (removing high-value banknotes from circulation).
But 2017 has started more brightly. Indeed, for the first time in two and a half years, the world’s four biggest emerging economies (Brazil, Russia, India and China, known as the BRICs) are all growing at the same time.
Russia’s GDP bottomed out at the end of 2015 (using seasonally adjusted figures) after the longest recession since the 1990s. It has expanded at a gathering pace for the past three quarters. Higher oil prices have helped, though Russia cannot profit fully from the improved market by ramping up sales without violating the production limits that caused the market’s recovery.
During the collapse of the rouble in late 2014 and early 2015, it was easy to forget some of Russia’s economic strengths, such as its consistent trade surpluses and its substantial foreign-exchange reserves (which never fell below $300bn). As Russia has regained its footing, the rouble has rebounded, gaining 15% against the dollar over the past 12 months, making it one of the world’s best-performing currencies.
Brazil’s torment has been even more prolonged. Its economy contracted for eight consecutive quarters as commodity prices tumbled, a president was impeached and a corrupt political class was impugned. Brazil’s political scandals remain far from resolved, but at least the weather has improved. Generous summer rains in states like Bahia contributed to a bumper harvest of soyabeans and corn in the early months of the year.
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