BRICS nations meet in September
China’s President Xi urged the BRICS nations – Brazil, Russia, India, China, and South Africa – to work together more closely in order to maximise the bloc’s growth potential. The ninth annual BRICS summit resulted in the Xiamen Declaration, which pledged closer cooperation between the five countries.
- The oil price reached its highest level since mid-2015
- Ratings agency S&P downgraded China’s credit rating from “AA-“ to “A+”
- Brazil’s central bank cut its key Selic rate by one percentage point to 8.25%
“Inflationary pressures picked up in India”
At the annual BRICS Summit in Xiamen, China’s President Xi Jinping urged the BRICS nations – Brazil, Russia, India, China, and South Africa – to work together more closely in order to maximise the bloc’s growth potential. Of the US$197 billion in outbound investment in 2016, only 5.7% took place amongst the five countries. In consequence, Mr Xi highlighted the scope for further cooperation between the BRICS nations as they enter a “second golden decade” . Following the summit, the leaders of the five nations released the Xiamen Declaration , in which they pledged to promote an equitable global economic order and people-to-people exchanges.
The oil price rose during September, propelled upward by a combination of geopolitical worries, rising demand, and cuts in production . The price of Brent crude oil climbed to US$59.25 per barrel during September, reaching its highest level since mid-2015.
Credit ratings agency Standard & Poor’s (S&P) downgraded China’s credit rating from “AA-“ to “A+”, citing concerns that an extended period of strong credit growth has “increased China’s economic and financial risks”. Nevertheless, S&P maintained its outlook for the country as “stable”, reflecting its opinion that China will “maintain its robust economic performance and improved fiscal performance in the next three to four years”. Over September, the Shanghai Composite Index ended the month 0.3% lower.
Inflationary pressures picked up in India during August, stoked by rising food prices. Consumer price inflation rose at an annualised rate of 3.36%, compared with a rate of 2.36% in July. The news quelled speculation that policymakers at the Reserve Bank of India (RBI) might implement an interest-rate cut at their next meeting in October. The RBI cut its key interest rate from 6.25% to 6% during August, citing a weak inflationary backdrop. The RBI’s inflation target currently stands at 4% . The CNX Nifty Index fell by 1.3% during September.
Brazil’s economy continued to strengthen during the second quarter of 2017, posting two consecutive quarters of positive growth after two years of decline. The country’s economy expanded by 1% during the first quarter and by 0.2% in the second quarter . On an annualised basis, however, Brazil’s economy shrank by 1.4%. During September, central bank policymakers cut the key Selic rate by one percentage point to 8.25%, citing “favourable” developments to the inflationary backdrop. The Bovespa Index rose by 4.9% over September.