Global economy in precarious state, Xi tells Brics summit

The leader of the world’s second largest economy called for more confidence-building measures

Gulf News

Benaulim, India: China’s 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 the leader of the world’s second largest economy said the long-term forecast for Brics members was positive as he called for more confidence-building measures.

“The global economy is still going through a treacherous recovery,” Xi said in a statement at the summit on India’s west coast.

“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.

Falling global demand

The nations, with a joint estimated GDP of $16 trillion (Dh58.7 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 world 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 of increasing 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 creation of Brics,” he said.

Valuable lessons

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.

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

“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.”

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 following a surge in tensions between the nuclear-armed neighbours.

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 San 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.