India, Brazil heading for `inevitable' financial crisis: report
14 May 2011
Emerging countries like Brazil and India, which run huge current account deficits, are heading for "inevitable" financial crisis over the next five to 10 years, a Chinese magazine quoted a central bank adviser as saying.
While China's huge trade surplus will keep it in good stead, a financial crisis is "inevitable" in countries like India and Brazil, which nurse huge current account deficits, Ceiling Magazine reported on its website www.caijing.com.cn, quoting Li Daokui.
"China will play a very important role during the financial consolidation. But there will be no such crisis in China because it is quite different from most other developing and developed countries," he told a forum.
India's trade deficit is projected to more than double to $278.5 billion in three years and may cause serious payment problems for the country, the Indian government itself had admitted, earlier.
Brazil's problem stems from its huge outgoes that foreign firms repatriate as profits to their home countries.
Li Daokui also expects the US dollar, euro, and the yen to face downward pressure over the medium and long term.
