IT WAS no real surprise that Brazil should have overtaken the UK in a league table of economic output this year to become the world’s sixth-largest economy.
Since 2008, Britain has suffered from a fall in economic output during the recession, and growth has been anaemic this year and last. In contrast, Brazil has not really stopped growing, with GDP rising 7.5% in 2010 and estimated to have risen 3.5% in 2011.
According to the Centre for Economic and Business Research (CEBR), which produced the league table, it is part of an ongoing shift in the balance of global economic power.
Brazil has benefited from a booming trade in the raw materials, particularly iron ore, that have fed China’s voracious economic appetite, though it would be wrong to characterise Brazil as merely a producer of primary goods. The country also has a growing manufacturing sector.
Nor is it solely dependent on China, as it also trades with other South American nations and the US, not to forget its own thriving internal market place.
Britain’s relative decline in the world rankings of economic output is set to continue into the future. According to CEBR, Brazil and Russia will supersede Germany, while India will gain a top 10 place.
Germany will slip to become the world’s seventh- largest economy, Britain eighth and France 11th. What we now call the emerging economies will have emerged.
While, in terms of pure economic kudos, it is regrettable that Britain’s status is slipping, the fact is it doesn’t really matter all that much.
For the time being, and for several decades yet, Britain’s output per capita will remain far higher than Brazil’s. The South American country has more than three times the population.
The same is even more true of China, Russia, India and other nations.
Indeed, the growth of these nations is beneficial to Britain and other western countries. It creates a bigger export market for us to sell our goods and services. That’s not to say it’s going to be plain sailing. Growing demand from these nations is likely to re-ignite inflation over the next decade, for example.
There is also a more immediate benefit. It is without doubt in the fundamental interests of these now big economies to contribute to the process of restoring health and prosperity to the world’s economy.
In particular, it would be short sighted of them to fail to bail out the eurozone or its banks, should that become necessary later this year. They need eurozone consumers to start spending again. With multi-trillion dollar economies, they can now afford to chip in to any IMF arrangement to save the euro.
At the very least, the emerging nations are likely to fuel the global economic recovery in the later part of 2012 and throughout 2013.
Bringing the analysis much closer to home, any growth in international trade has to be good news for a port economy. Our tourist market is also likely to benefit from worldwide growth in the number of prosperous people capable of affording the cost of travel. Our universities have already made inroads into the Chinese market, attracting hundreds of students.
British educational institutions have a strong international reputation, meaning we can probably sell our services to other emerging markets. Even British manufacturers could benefit, the Halewood-built Evoque being a great example.
So, while the next few months may remain economically gloomy, it is foreseeable that things will pick up strongly in the not too distant future.