BRICs miracle may be over; Spurt in US govt deficit; 'Fiscal cliff' can be costly affair; South Africa's grave future; India's Made-in-China Diwali

1 BRICs miracle may be over (Ambrose Evans-Pritchard in The Telegraph) The catch-up boom in China, India, Brazil is largely over and will be followed by a drastic slowdown over the next decade, according to a grim report by America’s top forecasting body.  Europe's prognosis is even worse, with France trapped in depression with near zero growth as far as 2025 and Britain struggling to raise its speed limit to 1% over the next three Parliaments

The US Conference Board’s global economic outlook calls into question the "BRICs" miracle (Brazil, Russia, India, China), arguing that the low-hanging fruit from cheap labour and imported technology has already been picked.  China’s double-digit expansion rates will soon be a romantic memory. Growth will fall to 6.9% next year, then to 5.5% from 2014-2018, and 3.7% from 2019-2025 as the aging crisis hits and investment returns go into "rapid decline".

Growth in India - where the reform agenda has been "largely derailed" - will fall to 4.7% to 2018, and then to 3.9%. Brazil will slip to 3% and then 2.7%. Such growth rates will leave these countries stuck in the "middle income trap", dashing hopes for a quick jump into the affluent league.

"As China, India, Brazil, and others mature from rapid, investment-intensive ‘catch-up’ growth, the structural ‘speed limits’ of their economies are likely to decline," said the Board. The fizzling emerging market story is a key reason why the West has relapsed this year. The world is now facing a synchronized downturn all fronts, with little scope for fiscal and monetary stimulus.

2 Spurt in US government deficit (BBC) The US government's budget deficit rose sharply in October, highlighting the financial challenge President Barack Obama faces following his re-election. The deficit increased 22% from a year earlier to $120bn as government spending outpaced tax revenues. It comes as politicians debate how to deal with the so-called fiscal cliff of automatic tax increases and spending cuts due to take effect in January.

The deficit is the amount by which government spending exceeds its tax revenues, with the government needing to borrow the difference. US Treasury Secretary, Timothy Geithner, has warned against extending all of the tax breaks that are due to expire in January as a way of giving Washington more time to broker a deal on the deficit.

Among the measures due to expire are the income tax cuts for high income earners originally introduced by former President George W Bush, which have been vociferously defended by Republicans in Congress. The US government accumulated a total budget deficit of $1.1tn in the last fiscal year, that ended in September, or 7% of GDP.

3 ‘Fiscal cliff’ can be costly affair (Kathleen Pender in San Francisco Chronicle) If the US Congress lets the country go off the fiscal cliff, how much will it cost households? The Tax Policy Centre estimates that 90% of households would face a tax increase averaging about $3,600 next year, but that number is skewed by large increases at the top of the income scale. The top 1% would see their taxes rise by more than $120,000.

Middle-income households - with income of roughly $40,000 to $65,000 - would pay about $2,000 more. These estimates assume that a boggling array of tax breaks approved during the George W Bush administration expire as scheduled at the end of this year. They also assume that several tax cuts approved during the Obama administration - including a two percentage point decrease in the Social Security portion of payroll taxes - expire. The estimates ignore the impact of other fiscal-cliff happenings, such as automatic cuts in federal spending and an abrupt end to federal extended unemployment benefits.

How cliff diving would affect individuals depends on income, marital status (the so-called marriage penalty would come back for many couples), whether one has children, are paying for college, owns a business, has income from dividends and capital gains, and is subject to the alternative minimum tax.

4 South Africa’s grave future ( Jonathan Power in Khaleej Times) The great inequality of land owning in South Africa persists — whites own 75% of the land while constituting less than 10% of the population. The black bourgeoisie, especially well-to-do government hierarchy members, as in Zimbabwe, are buying out white farmers. Where will it end? Where will the gathering urban unrest and rural discontent lead to?

President Jacob Zuma does not appear to recognize the dangers ahead. During the miners’ strike he has made only anodyne remarks. His idea of rural development appears to be limited to building a large-scale compound for himself in his home village. There is little sign that resources are being re-directed either to the urban slums or to agricultural development.

An unnecessary defence budget has been grossly enlarged, creaming off funds needed for rural and urban slum development, despite the country having no external enemies and no likelihood of any. But arms purchases did provide backhanders for powerful African National Congress government members including, it has been alleged, the president himself. Is South Africa digging its own grave? That is the question.

5 India’s Made-in-China Diwali (Preetika Rana in The Wall Street Journal) A leading trade body suggests India will celebrated a “Chinese Diwali” this year, a reference to the surging demand for Chinese imports ahead of the major Indian festival. In a recent study, New Delhi-based Associated Chambers of Commerce and Industry, estimated the sale of made-in-China Diwali goods, from embellished Hindu idols to colorful earthen lamps, had increased at least 45% from last year.

So what led to this? India’s inflation rate, which has hovered close to 7% this year, is largely to blame, DS Rawat, a senior official at Assocham. The mounting cost of raw materials – from paper to paint – forced Indian artisans to raise prices of popular household items this Diwali. In comparison, Chinese goods, produced in bulk and shipped in large quantities across the border, cost a fraction of their Indian counterparts.

A string of 100 made-in-China lights, for instance, costs between 40 and 60 rupees (about 70 US cents to $1.10), the trade body notes. A similar product made in India is priced between 80 and 100 rupees ($1.45 to $1.80), twice the amount it sold for last year. “Customers, no doubt, are opting for the cheaper buy,” said Mr. Rawat.