As the United States continues to experience a serious economic slowdown, exchange traded funds (ETFs) face many challenges as even the BRIC economies are feeling the repurcussions.
Regardless of whether or not the United States is truly in a recession, it is undeniable that it has experienced a serious economic slowdown based on a number of different factors. As the BRIC economies all currently fight inflation, exports from these countries will be adversely affected by the slowdown here, reports Deidre Keown for Advisor Perspective.
The degree to which of these countries are most vulnerable to the U.S. slowdown varies. China and Brazil feel the effects most. Nearly one-fifth of Brazil’s total exports went to the Unites States, and it is predicting a slowdown of growth from 16% in 2007 to 12% in 2008. China estimates that nearly 19% of total exports were U.S.-bound in 2007, as exports account for 70% of the Chinese GDP. However, this is unlikely to make much of a dent in China’s economy given its double-digit growth.
India is vulnerable to an extent, as about 15% of exports went to the United States in 2007. Exports account for 33% of Indian GDP. Estimates show that India’s growth is likely to drop by 2% this year.
Russia is the most insulated from the slowdown here, with just 3% of its total 2007 exports heading for us. This will be a disadvantage in the long run, but in the short run, this insulation from our country will cushion them from our own downturn.