Globalization: From Russia With Confidence

Sluggish growth in the U.S., recession danger in Europe? No problem. The global economy is doing well anyway. The emerging markets are rapidly growing up and are taking more responsibility for the world economy. BBC reports that the combined consumer demand of China, India, Brazil and Russia (the so-called BRICs) is almost the same size as the US when the data is adjusted for purchasing power parity (bbc.co.uk). Therefore rising consumer spending in the BRICs is compensating for the weakness in the traditional economies.

Today we get news that the Russian economy is gaining speed again. Gross domestic product in Russia expanded 4.8% from a year earlier, the fastest pace since the second quarter of 2010, reports Bloomberg (bloomberg). Encouraging is the 9.2% jump in retail sales. This is the biggest increase since October 2008 after the 7.8% gain in August (Bloomberg). The huge Russian economy benefits from the vast reserves of oil & gas and its powerful agriculture production.

The Russian news suits the recent reports from China, where the retail sales jump 17%. We can expect the strong consumer spending growth in these countries to continue for years to come because of rising incomes and a huge backlog demand compared to the U.S. and Europe.