Global economy in precarious state, Chinese president tells BRICS summit

PUBLISHED : Sunday, 16 October, 2016, 6:32pm
UPDATED : Sunday, 16 October, 2016, 6:32pm

President Xi Jinping warned Sunday that the global economy remained in a precarious condition as leaders of the BRICS group of nations tried to find ways to fire up growth in the troubled bloc.

Speaking at a summit in the Indian state of Goa, Xi told his host Narendra Modi and the leaders of Russia, Brazil and South Africa that the club of emerging powers had been undermined by both domestic and international woes.

But, as he called for more confidence-building measures, the leader of the world’s second-largest economy said the long-term forecast for BRICS members was positive.

The global economy is still going through a treacherous recovery
President Xi Jinping

“The global economy is still going through a treacherous recovery,” Xi said in a statement at the summit.

“Because of the impact of both internal and external factors, BRICS countries have somewhat slowed down in economic growth and have faced a number of new challenges in development.”

BRICS was formed in 2011 with the aim of using members’ growing economic and political influence to challenge Western hegemony.

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The nations, with a joint estimated GDP of US$16 trillion, set up their own bank in parallel to the Washington-based International Monetary Fund and World Bank and hold summits rivalling the G7 forum.

But the countries, accounting for 53 per cent of the world’s population, have been hit by falling global demand and lower commodity prices, while several have also been mired in corruption scandals.

Russia and Brazil have fallen into recession recently, South Africa only just managed to avoid the same fate last month and China’s economy has slowed sharply.

India by contrast is now the world’s fastest-growing major economy in an otherwise gloomy environment.

Modi said it was vital that the BRICS nations found ways to increase their levels of cooperation. He called for the dismantling of trade barriers, promotion of skills and infrastructure development.

“Promoting economic and commercial engagement has been a foundational impulse in the creation of BRICS,” he said.

Modi, who came to power two years ago, said his government’s policy of opening up the Indian economy had achieved results and offered valuable lessons.

We have transformed India into one of the most open economies in the world today
Indian Prime Minister Narendra Modi

“In India, we have undertaken substantial reforms in the last two years to streamline and simplify governance, especially doing business in India,” the Indian prime minister said.

“The results are clearly visible. We have moved up in almost all global indices that measure such performances.

“We have transformed India into one of the most open economies in the world today.”

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Xi said there was no reason why the bloc’s members should not flourish, as he called on a group made of business leaders from BRICS nations “to take concrete actions to boost confidence”.

“The potential and strength of BRICS countries in terms of resources, market and labour forces have remained unchanged,” he said.

“The long term ... of BRICS development is still positive.”

Modi has also been using the summit to attempt to isolate India’s arch-rival Pakistan after a surge in tensions between the nuclear-armed neighbours.

In a meeting with his fellow leaders, Modi urged them to take a strong united stand against the “mothership of terrorism” in the South Asian region, in a thinly veiled reference to Pakistan.

Modi said a country in India’s neighbourhood held links to “terror modules” around the world, which BRICS should strongly condemn.

“In our region, terrorism poses a grave threat to peace, security and development,” he said.

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“Tragically the mothership of terrorism is a country in India’s neighbourhood,” Modi said without naming Pakistan.

Tragically the mothership of terrorism is a country in India’s neighbourhood
Indian Prime Minister Narendra Modi

Modi wants to isolate Pakistan internationally amid fury at home over recent attacks blamed on Pakistan-based groups that have left some 25 Indian soldiers dead.

But analysts are sceptical of India’s chances of securing a joint BRICS condemnation given China’s strong diplomatic support for Pakistan and Russia’s efforts to forge closer defence ties with Islamabad.

Taking place at the same time in Goa is a meeting of heads of a seven-nation grouping called BIMSTEC loosely based around the Bay of Bengal.

Myanmar’s Aung Sang Suu Kyi, Bangladesh Prime Minister Sheikh Hasina and the leaders of Sri Lanka, Bhutan and Nepal are set to hold talks also focused on trade. Thailand’s prime minister is not attending.