- Category: SPORTS NEWS
- Published on Monday, 31 October 2011 23:51
- Written by Administrator
(German Chencellor, Angela Merkel broods over Euro woes) Brazil to overtake UK as sixth-largest economy
[elombah.com] China has dashed hopes of a bailout of the euro by saying it was not the ‘saviour’ of Europe. Though it expressed confidence that the continent can survive its crisis, Beijing has made no public offer to buy more government debt from western states. And as further sign of a shift in the tectonic plates of world economy, Brazil's economy is set to overtake
British economy this year. The Latin American giant's GDP for 2011 is expected to hit $2.44 trillion (£1.51 trillion) compared with $2.43 trillion for the UK, the latest monthly forecasts from the Economist Intelligence Unit show.
This will see Brazil, which last year overtook Italy to become the world's seventh biggest economy, move up one more place to sixth with the UK falling to seventh.
‘Despite differences in politics, economy and culture, China and the EU are still good friends and partners,’ the state-run news agency Xinhua said.
‘However, amid such an unprecedented crisis in Europe, China can neither take up the role as a saviour to the Europeans, nor provide a ‘cure’ for the European malaise.’
EU leaders agreed to quadruple the eurozone’s bailout fund to €1trillion on Thursday but neither the European Central Bank, International Monetary Fund or any European country was willing to add to the pot.
Instead, the head of Europe’s rescue fund sought to entice China by saying investors may be protected against a fifth of initial losses – and that bonds could eventually be sold in yuan if Beijing desires.
Klaus Regling, chief executive of the European Financial Stability Facility, held talks in Beijing on Friday in an attempt to coax another £60billion out of China, already a major holder of EFSF bonds.
China holds £2trillion in a sovereign wealth fund but communist leaders may find it hard to convince its people that it should help Europe in its hour of need. ‘Europe is much richer than China. How can they be short of money?’ said one writer on microblogging site Weibo.
Meanwhile, Brazil will overtake UK as sixth-largest economy this year. Robert Wood, the EIU's chief economist on Brazil, said the country's surge up the table owed much to a growing consumer class and a booming trade relationship with China, based on the Asian giant's need for commodities such as soy and iron ore.
"It's partly the story of the lower income classes rising up in Brazil to join the middle-class and partly the sheer size of the population of nearly 200m," said Mr Wood.
"This also links in with Brazil's emergence in terms of being dragged up by demand from China. We are in the middle of a commodity super-cycle that will last for some time but at some point the really good times Brazil is enjoying will cool off a bit."
According to the EIU, Brazil will lose sixth place to India in 2013 but regain it in 2014 the year it will host the World Cup - when its GDP overtakes that of France.
The forecasts suggest that Brazil's economy will be bigger than any in Europe (Chicago Options: ^REURUSD - news) by 2020 when it overtakes Germany to become the fifth biggest globally after China, by then the world's leading economy measured in dollars, the US, India and Japan (EUREX: FMJP.EX - news) .
The UK will find itself placed ninth in the global league table in 2020, predicts EIU, with Germany sixth, Russia seventh and France eighth.
Brazil grew by 7.5pc last year after comfortably weathering the financial crisis of 2008 and 2009. The EIU predicts it will see growth of 3pc this year and 3.5pc in 2012, compared with 0.7pc for both years in the UK.