Sales assistants serve customers at a firecracker and fireworks store during the festival of Dhanteras in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Mr. BRICs Says China's Weaker Consumer Means India Needs to Grow

(Bloomberg) -- China’s consumer slowdown is all the more reason why the world needs faster economic growth in India.

That’s according to Jim O’Neill, a former Goldman Sachs Asset Management chair and ex-commercial secretary to the U.K. Treasury, who coined the acronym BRIC in 2001 to describe Brazil, Russia, India and China as a group.

O’Neill says he has been surprised by parts of China’s slowdown from a structural and cyclical perspective, even while noting that his original BRIC forecasts at the turn of the century assumed that China wouldn’t be able to grow much above 5.5 percent from 2021 to 2030.

"I am currently most concerned about the slowdown of the consumer," O’Neill, who is chair of the Chatham House think tank, said in emailed remarks. Retail sales growth slowed to 8.6 percent in October, down from 9.2 percent a month earlier.

And he says that’s one reason why India needs to grow and ease the world’s reliance on growth in the U.S. and China.

"All efforts should be done to help India expand at a faster rate of growth and for it to have closer trade ties with China, and start to grow its own middle classes at the same sort of rate China has done the last 25 to 30 years," O’Neill said.

India could also gain from President Xi Jinping’s signature Belt and Road Initiative -- the roll out of which hasn’t gone well, according to O’Neill -- if China allowed other major Asian economies to play a greater role in it.

While O’Neill needs fresh evidence that China’s consumer base is growing more strongly and the middle class is expanding, he remains overall upbeat on the world’s second largest economy.

"China’s ongoing development is, quite simply, the most important economic development in the world."

©2018 Bloomberg L.P.