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by James Corbett
BoilingFrogsPost.com
March 19, 2013

Oh what a difference a decade makes. Ten years ago, few had any inkling of the economic marvel that was about to befall Brazil. Since 2003, nearly 40 million Brazilians were lifted out of poverty, joining the ranks of the middle class and buying consumer items like televisions and cars for the first time. This in turn spurred more economic growth culminating in a 7.5% GDP growth rate in 2010 that was the country’s best economic performance in 25 years. At the end of the decade, Brazil was a country transformed, and by 2012 it had overtaken the UK to become the world’s sixth largest economy.

Now, after the phenomenal growth of the last decade, it seems the wheels have fallen off of the Brazilian economic freight train and the growth has come to a screeching halt.

Still, despite this recent slowdown, Brazil stands in a fundamentally different position on the world stage than it did a decade ago. And this is largely due to the relationship that it has fostered with its new largest trading partner: China.

Although there has been little historical link between Brazil and China, the two nations were paired along with India and Russia in a grouping of developing countries that were identified as economies to watch over the next decade by Jim O’Neill, the chief economist at Goldman Sachs, back in 2001. In the ensuing years, this arbitrary grouping started seeing themselves as a potential emerging market trading bloc, and began holding ministerial meetings in 2006. The first full-scale BRIC summit was held in Russia in 2008, and in 2010 South Africa was added to the group.

Combining nearly half the world’s population, these five countries account for a combined $14.9 trillion in GDP and over $4 trillion in foreign reserves. In 2012, BRICS-world trade accounted for 16% of global trade and they pledged $75 billion to the IMF during its funding drive last year in return for promised voting reforms within the organization.

Now, the BRICS nations are preparing to further deepen their integration at the next BRICS summit in Durban, South Africa later this month.

Late last month, I had the chance to talk to Pepe Escobar about the BRICS and what they are seeking to accomplish at this next summit.

As one sign of this ambitious plan, one of the items on the agenda at this coming summit will be a Development Bank that may in time be used to supplant the World Bank/IMF hegemony over development aid and crisis funding.

Obviously, there are many unknown quantities in this mix at this point, and proposals like the Development Bank will necessarily be some years off from being a serious institutional structure, it is important to note that the economic and financial groundwork for a Bretton Woods alternative are being laid as we speak, and are incorporating those parts of the world which would have been dismissed as economic featherweights a mere decade ago.

The world’s economic landscape continues to be transformed, and one thing at least, seems sure: whatever takes place from this point, Brazil’s economic livelihood will depend less and less on its American economic ties, and more and more on its regional ties and BRICS partners in a world economy which is slowly but surely building pathways around the hegemony of the US petrodollar.