Amid the media buzz here in Cannes over Europe’s ever deepening crisis, it is easy to forget that the core agenda for the Summit is supposed to be “strong, sustainable, and balanced growth”.
Whereas for the advanced economies, especially those with trade deficits, the key word above is “balanced”, for much of the developing world, the key word is “growth”.
Solving Europe’s problems, long-term, and global macro-imbalances only has meaning if there is growth in the world economy; strong and sustainable.
And it is here that the BRICS come into the discussion.
In a world economy wracked by Europe’s problems and American debt, a wobbly dollar and employment problems, much is riding on the continued growth of the emerging economies.
For example, as Andrew Mold, the Head of the Macroeconomic and Social Policy Cluster at the UN Economic Commission’s Sub-Regional Office for Eastern Africa has noted, a number of East African nations have been experiencing a run of 5-6 percent GDP growth for the past five years, and this growth has been tied to exports to the emerging economies.
The sense of optimism felt in these African countries is similar to that felt in the high growth zones of Asia and Latin America.
It would be understating the case to say that the rest of the developing world is “hoping” that the growth of the BRICS will continue. And that Europe and the US do not drag down everyone else.
While all members of the G20 recognize that trade and financial imbalances need to be addressed in some way, even if only because they generate political tensions, at the same time, the world economy cannot afford to injure or lose the growth of the BRICS economies.
This is the careful balance that the G20 must try to achieve, as they work, painstakingly, toward a more constructive approach for putting the world back on the path of strong, sustainable, and balanced growth.
What we don’t need is a rebalancing agenda that injures the fragile global growth that we do have.
Gregory Chin is chair of CIGI's China Working Group, acting director of CIGI's Global Development program, and a faculty member at York University. Dr. Chin is available for further comment at the International Media Center in Cannes this week.