Two major caveats to growth projections

There are two major caveats to the BRICS' growth projections. The first involves international trade prospects amid rising US protectionism. The second has to do with the impact of these trade actions on the consequent global prospects.

After a year of threats, the Trump administration initiated a tariff war against China in March. The measures became effective early this month. What began with "national security reviews" on steel and aluminum soon spread to intellectual property rights and technology. Moreover, the friction with China soon broadened to US trade conflicts with the other North American Free Trade Agreement signatory countries, European and East Asian nations and many other economies.

If the Trump administration keeps moving away from the postwar trading regime, these frictions will broaden and extend to multilateral levels. And even if a full-scale trade war cannot be avoided, then the tariff wars have the potential to spread across industry sectors and geographic regions.

After the first half of 2018, the International Monetary Fund's growth projections have already been revised down for Europe, Japan and the UK, as well as for Brazil and India. As economic uncertainty rises, investors can no longer ignore it. And given the right adverse triggers, a "sudden reassessment of fundamentals and risks by investors" is now a viable possibility.

Yet in the long run even negative turns, if they are short term, cannot slow down the relative rise of the large emerging economies－they can slow their growth, though. Besides, if trade risks increase drastically, secular stagnation in major advanced economies will deepen as well.

As for the second caveat, amid the global financial crisis, China accounted for almost 50 percent of global growth－it still accounts for some 30 percent of global prospects.

The implication is that the way China goes, the world will follow. In positive scenarios, such economic spillovers support global growth. In negative scenarios, such spillovers would penalize those growth prospects－and the collateral damage would likely be the worst in emerging and developing economies.

What will the catch-up by the BRICS economies under these conditions mean in terms of global economic power?