Welcome to the post-BRIC world

By R.A. | WASHINGTON

DECLARING an end to the BRIC era might seem the height of foolishness. Last year Brazil, China, India, and Russia accounted for a quarter of global output, a figure that is forecast to rise to about one-third by the end of the decade. China will probably become the world's largest economy before then. India should continue to rise through the ranks as well. As the paper notes this week China, alongside many of the world's populous emerging markets, is destined to regain its historical place among the world's major economic powers.

That dominance is not inconsistent with the arrival of a major turning point for the world economy. In 1980, China and India together accounted for less than 5% of global output. Last year, the two were responsible for over 20% of world GDP. The transition from the one figure to the other was responsible for massive and highly disruptive changes across the global economy. The world trade order has been stood on its ear. The movement of hundreds of millions of new workers into global labour markets has had an enormous impact on real wage growth and real interest rates and, consequently, on innovation and investment. The strain on supplies of all sorts of goods and resources, from oil and gold to wine and art, has generated wild price gyrations and remarkable economic knock-on effects in producing and consuming countries.

It is this era of major and disruptive economic transformation that seems to be at an end. BRIC growth rates are slowing. In China's case, that seems to be at least partly due to maturation (in several senses). Rapid, resource-intensive, investment-led growth is giving way to a more consumption and services oriented economy. And China's workforce is aging and shrinking. In India, the pace of reform looks inconsistent with double-digit growth rates, and Brazil and Russia may struggle as the supply response to high commodity price erodes the value of their economic cash cows. In 2012, according to IMF data, the sum of the growth rates of China and India stood at its lowest level in just over 20 years.

Large emerging markets will continue to grow. But the process of moving from 4% of world GDP to 20% was bound to be easier, faster, and more disruptive than the shift from 20% to 36%. Even in the best, no-political-system disaster scenario.

The era of disruptive BRIC ascendence is over. What that might mean for advanced economies is very tough to say. It could mean better times ahead for workers who experienced a steady erosion in their bargaining power over the past three decades. Unless, that is, the main effect of cheap emerging market labour was to delay labour-saving technical change. Commodity prices could be in for a long period of stagnation as slowing demand growth from emerging markets interacts with soaring supply. Newly developing economies, in sub-Saharan Africa, for instance, could struggle amid stagnating commodity demand or could begin to take over parts of supply chains previously occupied by cheap labour in no-longer-cheap BRICs. Trade and geopolitics could become less fraught as emerging markets place less economic strain on the rich world. Or the end of easy double-digit growth in China and India could lead to more bickering over petty economic and political questions.

What comes next isn't clear, but the world does appear to be entering a new phase of global growth.