BRICS AND MULTILATERALISM

MULTILATERALISM IN A MULTIPOLAR WORLD

Andrew Sheng

The Star, March 2, 2013

Who has that vision of global public responsibility?

After the Chinese New Year holidays, I visited Rio de Janeiro for a conference to discuss the state of the global economy.

I last visited Brazil in 1986, when the whole of Latin America was suffering terribly from the Latin American debt crisis. Today, Brazil is the B in the BRIC economies, with a population of over 190 million population, the fifth largest in the world, with nominal GDP of US$2.5 trillion, 7th largest in the world. There is quiet confidence in air, especially since Brazil's largest neighbour, Argentina, has once again gone back to recession due to mismanagement.

In fact, other than Asia, which has benefited from the rise of China, India and South-East Asia (particularly Indonesia), Latin America is increasingly an important emerging region. Within Latin America, the Pacific countries, such as Chile, Colombia and Peru are emerging as growth leaders, moving to 5% annual growth because of their openness to trade and ability to increase domestic investments.

What is most remarkable is the growth in international trade between the leading Latin American countries with China. In 2000, China moved from 36th place and 35th place in trade with Colombia and Venezuela respectively to 2nd largest trading partner with both countries. Today, China is the largest export market for Brazil, Chile and Peru, so there was no doubt how keen Brazilians are to learn about China.

As one of the members of G20, Brazil has been an important supporter of multilateralism, since free trade has been seen as beneficial. But there are subtle changes in their views on capital flows. Large inflows of short-term capital have driven the Brazilian real upwards, and while commodity exports have benefited from a strong real, manufacturing exports are affected. Brazil is watching closely whether a global currency war will emerge, particularly if there are major moves in the yen and East Asian currencies.

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