China, Russia & India in Top 4 Biggest Economies & “War in 3 to 4 months”?

The economic might of the Chinese and Russian alliance is often poorly understood. If you throw in India, you have 3 of the BRICS alliance countries in the top four economies in the world in ‘real’ terms or the so called PPP (purchase power parity).

Investopedia defines PPP as follows:

“Purchasing power parity (PPP) is a popular macroeconomic analysis metric used to compare economic productivity and standards of living between countries.

PPP involves an economic theory that compares different countries' currencies through a "basket of goods" approach. That is, PPP is the exchange rate at which one nation's currency would be converted into another to purchase the same and same amounts of a large group of products.”

It is similar to the Big Mac index you may have seen elsewhere.

The World Bank recently updated its rankings and it saw the Russian economy overtake Japan to take 4^th spot behind China (1^st), U.S. and India per the chart below.

It wasn’t long ago that Germany held 5^th position but, somewhat ironically, the cut off from Russian gas and other economic shocks has seen Germany, the powerhouse of Europe, slip now to 6^th. The other peripheral piece to take away from this is the impact the Ukraine war has had on Russia. From MSN Money:

“…economists estimate that Russia’s growth potential has increased from 1-1.5% pre-war to around 3.5% now. Last year, Russia’s economic growth caught analysts off guard with a 3.6% expansion. This year the World Bank has already almost trebled its forecast for growth from 1.1% to 3.2%. Russia’s Economic Ministry is similarly bullish.

Even the World Bank’s PPP adjusted size of the economy may be an underestimate. The World Bank also estimates that 39% of Russia’s economy is in the shadows, while the shadow economy only makes up 10% of Japan’s economy, which would add an additional $2.5 trillion to Russia’s $6.4 trillion PPP adjusted economic size – still not enough to overtake India’s $14.6 trillion PPP adjusted GDP value, but widening the gap with Japan further.”

History is littered with examples of Governments resorting to war to ‘fix’ (or dare we say hide) their broken economy or rectify its standing on the global scene. Right now we have the spectre of the end of the U.S. / Saudi Petrodollar after 50 years of underpinning the U.S. Dollar, the rampant de-dollarisation and sell off of U.S. Treasuries by sovereign states by both friend and foe, unprecedented buy up of gold by the world’s central banks (and none more than China), clear signs of preparations for war by 2 of the largest players (U.S. and Germany), and live conflicts in Ukraine and Palestine with the latter escalating to include Lebanon seemingly any day and of course the Chinese sabre rattling around Taiwan. What is going on?

There is a very sobering video of an interview with the Serbian President going viral right now. Below is a repost by billionaire investor Frank Giustra who says “A must watch-“If you bet on the fact that someone is bluffing, that means you don’t have a better hand”.”

You can view the video down below.

A must watch-“If you bet on the fact that someone is bluffing, that means you don’t have a better hand” https://t.co/hVhoGyW5R3

— Frank Giustra (@Frank_Giustra) June 17, 2024

Hope for the best, prepare for the worst.

The Thai government recently announced it was preparing in its sovereign fund per the Bangkok Post:

“The Government Pension Fund (GPF) is reducing investments in assets that may be affected by war and increasing investments in gold and oil to mitigate risk.”