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Main Content
BRIC Break-Through
A decade ago, four countries – the BRIC countries - were predicted to overhaul the US and European economies within decades. What are their perspectives now?
The acronym BRIC was coined in 2001 by Goldman Sachs. It stands for Brazil, Russia, India and China - the countries to watch, the emerging markets to bet on. Together, they account for almost half of the population on the planet. Goldman Sachs predicted that it was only a matter of time before these countries as an aggregate overpowered the US as the world’s biggest economy.
Ten years later, all of the indicators are proving them right. China’s steady growth is noticeable from the beaches of Central America to the deserts of Africa. In 2003, China was predicted to be able to overtake the US in 2041, but now the forecasts have been pushed up to 2027. As a whole, BRIC will have caught up with America in 2018. Some even say that if China’s lower prices are taken into account, the country would be on top by next year.
Brazil presented an impressive 7.5% growth for 2010. The figures were so good that President Dilma Rousseff immediately tried to curb the enthusiasm for fear of overheating the market. Yet that could not prevent observers from noting that Brazil’s economy is now bigger than Italy’s, occupying the seventh place in the world.
The BRICs’ success also coloured Forbes’ 2010 list of the world’s richest people. China nearly doubled its number of billionaires to 115 in just one year’s time. India added 6 extra billionaires to the list, but their fortunes were usually significantly higher with the average Indian billionaire worth about $ 4.5 bn. No city in the world, however, has more billionaires than Moscow.
The BRIC countries themselves seemed quite happy with their status and the company they found themselves in. For a couple of years, they have been organising summits to develop collective strategies and to weigh in more on the global agenda. Their enthusiasm to work together seemed genuine. All four countries also emerged undamaged and fairly quickly from the financial crisis. A result of the BRICs’ focus on work and prudence, Brazil’s former President Luiz Inacio Lula da Silva proclaimed.
But the BRICs do not have all of the necessary force to support them. Some have questioned the categorization from the start. From up close, the four countries have very little in common. Especially Russia is sometimes said to be the odd one out; its characteristics are completely different from the other three. Brazil, China and India all sail on a demographic boom, counting on a populous young generation for innovation. Russia tends to resemble Europe with its ageing population and a decreasing birth rate. It owes its economic success mainly to its gas and oil reserves, while the other three thrive on services and manufacturing.
The recent success also feeds into the fear of overheating. The BRICs withstood the crisis so well that they have been used as a safe haven for capital, slowing down growth rather than stimulating it. Yet as history has shown many times and in many places, an economic bubble is quickly made.
In the mean time, the financial markets are already on the lookout for the next emerging countries. Indonesia or Mexico are sometimes added to the list - BRICI? BRICM? - though countries such as Egypt, Vietnam, Turkey and Nigeria are often tipped as well. Others advise to keep a close eye on Africa. Whatever the next focus may be, the BRICs seem to be old news already.
Despite the search for the next new emerging economy, indicators suggest that the foursome is more relevant than ever. Further growth promises to lift hundreds of millions of people out of poverty. This emerging middle class will likely have an enormous influence on the remainder of the world. Not only will their demand for consumer goods change everything from energy consumption to export opportunities, but they will weigh in more and more heavily on global decision-making. New players may arrive, but the BRICs remain the four to watch.