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You claimed it was solely about population size, and now you say it’s about starting with a low base. Make up your mind! Look up the definition of the word “solely”, since you thought it was about population.
The BRIC countries happen to have the fastest growing economies now. Brazil and Russia doesn’t have comparatively large populations, yet they still have fast growing economies, so clearly it’s not solely because of population size.
When countries have savings, they have the capacity to increase consumption internally, so growth is not surprising. These BRIC countries have excess savings and liquidity as a common factor, which gives it more options. Contrastingly, when countries are already burdened with debts, not only does that reduce current income since some of the tax revenues are used to service existing debts, but it also reduces the consumer’s ability to keep up consumption. That’s partly why retail sales have dropped off by over 30% during this past Christmas season in USA. The projected first quarter GDP growth for USA is zero, and perhaps even negative. We will know by the second quarter of 2008.
The just passed stimulus package may help GDP growth in the second quarter of 2008, if Americans use the money to consume. We will not know that until we reach the third quarter of 2008, whether Americans chose to consume the stimulus package, or chose to do something else like add to their savings, or pay down existing credit card debts. If they choose to do the latter, it will not do much for GDP growth. The stimulus package is yet another example of actions to stimulate the economy, but result in more debts, and greater financial weakness.
To all other readers:
Credibility matters! Here’s a rhetorical question for people to consider.
What does all the following people have in common?
Dr. Phil writing a diet book
Dr. Laura giving relationship advice on the radio
Schreiber giving economic and financial analysis
They all lack credibility.
Dr. Phil is overweight
Dr. Laura is divorced
Schreiber was flat broke