Since the outbreak of the global financial crisis in 2008, emerging economies ñ especially the BRICS,Brazil,Russia,India,ChinaandSouth Africañ have become the major engine of global economic growth. Amid these changes, the U.S. Federal Reserve is increasingly expected to discontinue its quantitative easing policy midway through the countryís economic recovery. Some BRICS economies are now mired in worsening financial turmoil, with their economic growth rates falling sharply.Zhang Maorong, an associate researcher with the Institute of World Economic Studies and the China Institute of Contemporary International Relations, believes that amid the global economic slowdown, BRICS nations still have tools at their disposal. Excerpts of his thoughts follow: 

In recent years, the bank accounts ofIndia,BrazilandSouth Africahave been on a path of constant deterioration. These countries rely on short-term foreign capital to hold their current account deficits. And with growing expectation of aU.S.liquidity contraction, the direction of global capital flow has reversed. The three countries' currencies are depreciating on a large scale. Since May, the Indian Rupee's exchange rate against the dollar hit a series of record lows, exhibiting a trend of currency crises with a depreciation scale over 20 percent.

The Brazilian Real depreciated to its lowest point in the last four years, with a peak depreciation scale of 18 percent. The South African Rand and Ruble's highest depreciation rate respectively reached 14 percent and 7 percent. Capital flight fromIndiaandBrazilonce triggered a twin slump in the stock and bond markets, creating a string of financial turbulence. Moreover, poor trade and investment conditions in these countries caused a sharp decline in their economic growth rates, erasing hopes for an economic recovery in the short term. According to statistics released by the IMF in July, the growth rates ofChina,India,Brazil,RussiaandSouth Africain 2012 were 7.8 percent, 3.2 percent, 0.9 percent, 3.4 percent and 2.5 percent respectively, decreasing 1.5, 3.1, 1.8, 0.9 and 1.0 percentage points from the year before.India's economic growth rate has fallen far below its annual average in recent years.Brazillost its status as the world's sixth biggest economy toBritain.

Now in 2013, the declining trend among BRICS economies is even clearer. In the second quarter,Russia's economy grew just 1.2 percent over the same period in 2012 – its worst performance since 2009.Russiahas lowered its economic growth expectations twice in the past four months, from the original 3.6 percent to 1.8 percent. 

Deep troubles

Having been drunk with the unprecedented prosperity brought by high-speed economic growth, BRICS countries had no incentive to conduct economic and social reforms during the past 10 years. They neglected, or didn't pay enough attention to problems coexisting with economic development, which caused the economic growth dynamic to vanish. 

BRICS economies are in need of transformation and upgrading. Besides reduced demand from developed countries and increasing global trade protectionism, sliding competitiveness and insufficient domestic demand are even more crucial to BRICS economies' rapidly decreasing economic growth. 

The economic growth dynamic of BRICS countries does not yet stem from technological innovation and efficiency. In other words, their industrial added value is not high enough. Currently, the industrial added value rate ofChinais less than 30 percent, and stands at about 20 percent inIndia– far below that of theUnited States' figure of over 45 percent. Statistics from HSBC show thatChina,IndiaandBrazilall received fewer processing industry orders in July. In addition, BRICS countries' domestic demand is not high enough. In 2012, domestic consumption's rate of contribution was 51.8 percent inChina, and 55 to 65 percent inIndiaandRussia, which were far below the global average of 70 percent. The average rate in developed countries is as high as almost 80 percent.

The BRICS must find ways to break their domestic development bottleneck.China's banking sector leverage is too high; housing prices are stuck at a high level; and its manufacturing capacity is already in excess. Brazilian enterprises bear heavy tax burdens.Indiahas an unbalanced industrial structure, high inflation, high budget deficit, and high public debt. Moreover, poor governmental management leads to corruption and poor business environment. Banks are reluctant to loan to enterprises or consumers due to the country's poor macroeconomic environment.Russia,BrazilandIndiaare all woefully inadequate in terms of key infrastructural investment.Russiahasn't extended its road network since 1994. Not until 2018, whenRussiahosts the FIFA World Cup, will there be a highway betweenMoscowandSt. Petersburg.

The World Economic Forum released a 2013-14 global economic competitiveness report on September 4. India ranked 60th of the total 148 economies under investigation, which was its worst score in recent years, with the report noting that the country's infrastructural facilities, like transportation, information technology and energy production, are too behind to fulfill its economic development potential. 

BRICS' development advantages

BRICS economies on the whole perform adequately while maintaining strong risk-resistance. They have strong economic power, solid foreign exchange reserves and modified financial systems, which translate to more policy choices and better ability to defend against financial impacts such as in the Asian financial crisis in the 1990s. Currently, BRICS countries' capital flow is healthier than in the 1990s. Moreover, they adopt floating exchange rates to provide a buffer against capital flow reversion. For example,Chinahas a high foreign exchange reserve of $3.5 trillion. The Chinese economy hasn't been affected too much by financial turbulence in emerging markets. Its stock market and foreign exchange market operate smoothly, and its economic growth is stable.China's GDP is now about 40 percent of the total of emerging economies.

With a wide market and tremendous potential domestic demand, the BRICS still possess development advantages. The huge domestic market affords a flexible status in the slow global economic recovery. In the future, their education, social welfare investment and infrastructure construction will powerfully stimulate domestic demand.Russia, with its vast land territory, will undergo a new round of exploitation in its Far East regions. And lastly, as a leader of regional economic cooperation in Africa,South Africawill benefit from its growing market and development dynamic driven by its emerging middle class.