Saturday, 26 November 2011

A High CARBS Diet for Economic Growth

Thanks to Richard Park for bringing this important new acronym to my attention. Citigroup analysts have defined a new group of countries Canada, Australia, Russia, Brazil, and South Africa (CARBS).

What are the CARBS? They are the countries that combine very large commodity assets with high stock market liquidity. In many ways, they have exhibited similar characteristics so far over the course of the commodity cycle.

What have they got. The five CARBS economies have some 29% of the global landmass, inhabited by only 6% of the world’s population, and are thus disproportionately important as exporters of commodities. They produce between a quarter and a half of most key commodities."
The CARBS have a large share of the world's resource assets and a large share of global production of these assets. The increasing importance of resource scarcity and population growth indicates that resource exporters like the CARBS should do well in terms of economic growth.

Here are how the CARBS compare on a number of different indicators.

1 comment:

  1. Just thinking about this; the situation for Canada and Australia is similar --small SOE that is dependent upon a much larger 'closed' economy which has pricing power in global markets-- in that they both run the risk of Dutch disease (although some 'experts' who write for EconomyLab in the Globe & Mail don't consider this a problem). While Russia faces serious geopolitical concerns, Brazil is going to be faced with overheating and South Africa with a brain drain. It is my opinion but the population growth dynamic is in the 'developing' nations. The 'developed' world is entering the Age of Aging and amongst them, Canada & Australia will face challenges as demographics bump up against resource demand.