Columnist Fareed Zakaria, author of The Post American World, has penned a must read article for Newsweek on global growth. As the U.S., European, and Japanese economies continue to reel from the global recession, developing nation’s are chugging along with respectable growth rates. The banking sector is a case in point:
“Meanwhile, emerging-market banks are largely healthy and profitable. (Every Indian bank, government-owned and private, posted profits in the last quarter of 2008!) The governments are in good fiscal shape. China’s strengths are well known—$2 trillion in reserves, a budget deficit that is less than 3 percent of GDP—but consider Brazil, which is now posting a current account surplus. Or Indonesia, which has reduced its debt from 100 percent of GDP nine years ago to 30 percent today. And unlike in the West—where governments have run out of ammunition and are now praying that their medicine will work—these countries still have options. Only a year ago, their chief concern was an overheated economy and inflation. Brazil has cut its interest rate substantially, but only to 10.25 percent, which means it can drop it further if things deteriorate even more.”
Zakaria notes that the eclipse of other empires (political, military, and economic) were almost always for shadowed by slow growth and unsustainable debt burdens.