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The BRIC countries (, , , and ) constitute 20% of the world economy, and, according the IMF, will have a projected combined GDP of more than $14 trillion this year. Growth and prosperity have been bestowed upon these now-influential powers for the past decade. But clear signals are being given that these economic bastions are heading towards a muddy path, like most macro bull run investments do.
One such indication is the weakening of the currency. According to Bloomberg data, for the first time in 13 years, . An exhausting of these legal tenders has caused a chain reaction.
Foreign direct investment is not as attractive as it once was. The equity value of both locally-traded shares and companies based in the BRIC nations have . As these outflows increase, the governments of all rapidly lowered interest rates and extended tax breaks. Now, at the risk of losing their investment-grade credit rating, political and economic leaders need to cooperate. With globally low interest rates, BRIC countries have the opportunity to anchor growth.
These powerhouses can relieve themselves from such a predicament with collective action against overestimating growth, striking down international trade barriers, and creating policies that encourage domestic and global demand. With an increase in long-term capital, assurance can be rebuilt for a stronger currency. The solidity of an economy is, after all, based on its ability to communicate and collaborate for a higher goal.
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