True, policy inaction has transformed the Indian hare into a tortoise. Red tape and high labour costs are tying up Brazil’s growth. But their regional competitors are rising fast. With growth rates of more than 6 per cent, Indonesia is tipped to replace India as the “I” in the Brics club. Meanwhile, Mexico is benefiting from the reshoring of US companies from Asia. Were its new president to deliver on the promise to take on drug crime and fight off industrial oligopolies, Mexico would be in the position to outshine Brazil as Latin America’s most dynamic economy.
On the road to prosperity, few countries are marching more rapidly than Africa’s. The International Monetary Fund expects sub-Saharan Africa to have grown by 5 per cent in 2012. Four of the 10 fastest-growing nations in the world were African. Of course, it is much easier for countries starting from low levels of GDP to have record rates of growth. And with inequality widespread, a large chunk of Africa’s population still lives on less than two dollars a day. Yet large-scale investment from China in particular means infrastructure is improving and manufacturing growing. A middle class is rising and, with it, demands for better governance are strengthening.
Looking ahead to 2013, the developing world will continue to provide the best economic news. According to forecasts by the IMF, gold and silver in the race for fastest growth will go to South Sudan and Libya. These countries, however, are rebounding from years of war and destruction. Bronze will go, perhaps appropriately, to copper-rich Mongolia, whose natural resources – which also include gold, uranium and coal – are feeding China’s commodities hunger. More generally, resource-rich economies from Africa, Asia and Latin America will continue to do well.
As for the laggards, the list is unsurprisingly dominated by eurozone members. Six out of the eight countries for which the IMF forecasts a contraction in 2013 are in the eurozone. Even Germany and France are among the worst 20 performers. Is this an inevitable outcome? As austerity constrains the public purse, the economic outlook will depend on a pick-up of confidence in the private sector. This is difficult, but not impossible. The bold steps taken by the European Central Bank have brought down yields on peripheral bonds. Reforms passed in Spain, Ireland, Portugal and Greece mean their economies are rebalancing and their current accounts improving.
No one should expect 2013 to be much better than 2012. But those making this wish tonight at midnight should not feel completely hopeless about it.