A number of multi-lateral organizations met in the last week as China hosted the third summit meeting of the so-called BRICS countries (Brazil, Russia, India, China and South Africa) in Sanya, Hainan Province. The term BRIC was first used by Goldman Sachs to highlight Brazil, Russia, India and China’s potential for growth and development. South Africa attended for the first time (BBC).
While Brazilian President Dilma Rousseff attended the summit, Brazil’s finance minister, Guido Mantega, made strong remarks before the International Monetary Fund (IMF) in Washington, accusing the world’s developed economies, primarily the U.S., of attempting” to export their way out of difficult economic situations.” Mr. Mantega’s comments highlight the challenge for the U.S. and Europe as they work to transform the economic relationship with the developing world from one based on consuming imported goods to one that’s more balanced with more exports to the developing world. (NY Times).
Significant issues exist between members of the group. The value of the renmimbi or yuan, China’s currency, causes tensions. President Rousseff was to discuss the topic during her visit; however, her officials said she would avoid direct confrontation. “What we want is more reciprocity,” Rodrigo Baena, the presidential spokesman, said about the objectives of the visit (NY Times).
In the Sanya Declaration, a joint communiqué, the BRICS leaders stated that volatile commodities prices are a threat to the global economy, called for stronger regulation of derivatives markets and issued a call for the International Monetary Fund to expand its use of Special Drawing Rights (SDRs), which are used as a quasi currency to transfer funds between member governments. The U.S. dollar, as the world’s reserve currency, supersedes SDRs in that role (Economic Times).
Brazil’s economy is equal to the rest of the region put together, grew by 7.5% in 2010 and is projected to grow by 5.5% p.a. through 2014. Brazil is also leading an effort by Latin American countries to diversify relations beyond the U.S., particularly to Asia.
The rise of Brazil has been encouraged by U.S. policy makers and there is cooperation in counter terrorism, law enforcement and a range of other areas. There has recently been divergence on issues like Iran and Libya (NY Times).
An unexpected result of Brazil’s recent emergence is that Brazilian buyers of South Florida real estate are credited with fueling recently improving property prices. Upper class Brazilians are being joined by the middle class as they try to avoid crushing tax burdens by moving money offshore (Folha do Sao Paolo). South Florida is home to some 300,000 Brazilians, mainly in Broward County.