Brazil sees BRICS rising, euro zone default chance

Wed Sep 21, 2011 8:36am EDT

* World economic rearrangement happening -Brazil

* High chance of euro zone peripheral default -Brazil

SAO PAULO, Sept 21 (Reuters) - Brazil's finance ministry sees "high probabilities" of default among peripheral euro zone countries, with a rebalanced world economy perhaps leading to more power among major emerging markets.

The 2008 financial crisis is not completely over in advanced economies, the ministry said in its most recent Brazilian economic outlook report on Wednesday.

With the crisis now changing to focus more on sovereign debt in rich countries, "What is happening now involves high probabilities of default in the periphery of the Eurozone," the report read.

"In short, the world is undergoing an economic rearrangement that might culminate in a new balance of power, with increase in the importance of the most dynamic emerging market economies like Brazil, China and India," the report added.

Earlier this week, a Brazilian official said Brazil will propose that it and other large emerging market countries make billions of dollars in new funds available to the International Monetary Fund to help ease the crisis in the euro zone. [ID:nS1E78K06K]

Finance Minister Guido Mantega denied that plan but acknowledged the Brazilian central bank may have purchased those bonds to diversify its foreign currency reserves rather than as any part of an aid effort. [ID:nS1E78K06K]

Markets are increasingly skeptical that Greece will be able to pay its debts, with many economists expecting the country to be the first in the 17-nation euro zone to default.

Brazil, Russia, India, China and South Africa -- the powerhouse BRICS group of emerging economies -- are due to meet on Thursday in Washington.

(Reporting by Luciana Lopez, Editing by Chizu Nomiyama)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.