3. An Introduction
• The term was coined by Jim O’ Neil of Goldman
Sachs in 2001 in his paper titled “The World Needs
Better Economic BRICs.”
• BRICS is the acronym for an association of five major
emerging national economies: Brazil, Russia, India,
China and South Africa.
• The grouping was originally known as "BRIC" before
the inclusion of South Africa in 2010.
4. Is God Brazilian?
• Brazil is the top exporter of every commodity that
has seen dizzying price surges- iron ore,
soybeans, sugar
• Brazilian stocks and bonds climbed heavenward,
$5 billion in early 2007 to $50 billion in 2011
• According to Brazilian president it is Brazils
“momento magico”
5. “Momento magico” over??
• Brazil will "remain a drag on the rest of the world for
the next few years.“
• "The economy remains reliant on consumption,
mainly fuelled by credit, both of which are showing
signs of exhaustion.
• Industry remains stagnant
• Unemployment has crept up from historical lows.
• The hefty investments needed to overhaul Brazil's
ramshackle infrastructure aren't coming through
6. Russia:“There’s Room Only at the Top”
• Oil and Gas account for 50% of Russian Exports and
30% of the federal revenue
• Oil Profits are saved on a rainy day account called the
stabilization fund. In 2007 the fund held more than
$225 billion
• Since the late 1990’s the average Russian income has
risen from $1,500 to $13,000, more than twice as
China’s
7. Has Russia lost the thread?
• Growth in Russia has fallen for six
consecutive quarters.
• Stage 5 –declining population.
• In other words, Russia may be feeling
the effects of a region wide
slowdown.
8. “The Trajectory of Chinese growth”
• The emerging market mania began with China
• In 1998 China began an unbroken run of
growth at 8% or more each year till date
• Over the past decade China’s exports have
grown at an average yearly pace of 20%
9. The fountain of youth is going to dry!!
• Back in 2008 Premier Wen Jiabao described Chinese
growth as unbalanced, uncoordinated and
unsustainable!!
• Total debt as a share of GDP is rising fast
• Advantage of cheap labor, a key to Chinese boom is
quickly disappearing
• The declining workforce is leading China towards a “wage
driven inflation”
10. From BRIC to BRICS!!
• In the Investment Outlook Summit the prospects
of South African success was dismissed
• Jim O'Neil told the summit that South Africa, at a
population of under 50 million people, was just
too small an economy to join the BRIC ranks.
• The BRIC countries formed a political organization
among themselves, and expanded to include
South Africa
11. India on a Tiger Road!!
• India’s GDP has grown from 5.83% to 9.7 %
from 2000 to 2010 (at constant market prices)
• India is the highest exporter of textile, gems
and jewellery
• India is witnessing its period of large labor
boom
12. The Great Indian Hope Trick!!
• India, Bloomberg noted , faces "a crisis of
credibility."
• The process of economic reform that began in the
1990s, it said, "has ground to a halt."
• Corruption, red tape and subsidies are only one
part of the problem.
• India faces serious : As Mark Mobius of the
investment firm Franklin Templeton told : "The
surprising thing is the government doesn't seem
to be acting with any degree of urgency."
13. The Global Indian Statistics
Criteria Worldwide
Ranking
Population 2
Human Development Index 136
Public debt 29
GDP per capita 126
Imports 10
Exports 20
Labor force 2
14. Country Population
GDP
(nominal)
Government
spending
Exports Imports
GDP per
capita
(PPP)
Literacy
rate
Life
expecta
ncy
(years,
avg.)
HDI
Brazil 193,946,886 $2,395.9 bn $846.6 bn
$256.0
bn
$238.8
bn
$11,875 88.6% 78
.730
(high)
Russia 143,451,702 $2,021.9 bn $414.0 bn
$542.5
bn
$358.1
bn
$17,708 99.6% 67.7
.788
(high)
India 1,210,193,422 $1,824.8 bn $281.0 bn
$309.1
bn
$500.3
bn
$3,829 74.04% 64.2
.554
(medium
)
China 1,354,040,000 $8,227.0 bn $2,031.0 bn
$2,021.0
bn
$1,780.0
bn
$9,161 92.2% 72.7
.699
(medium
)
South
Africa
51,770,560 $384.3 bn $95.27 bn
$101.2
bn
$106.8
bn
$11,375 86.4% 51.2
.629
(medium
)
16. Projected growth in the GDP of G7 and
BRIC (in bill $)
Groups 2050 2045 2040 2035 2030 2025 2020 2015 2010
BRIC 128,32
4
98,757 74,483 55,090 40,278 28,925 20,226 13,653 8,640
G7 66,039 59,475 53,617 48,281 43,745 39,858 36,781 33,414 30,437
17. BRICS and G7 GDP comparisons
(in US bill $)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
YE 2010 YE 2015 YE 2020 YE 2025 YE 2030 YE 2035 YE 2040 YE 2045 YE 2050
BRIC
G7
18. Factors Behind The Growth Of BRIC
• Demographic dividend.
• Rise of the middle class.
• Science and technology in the BRICs
• Next emerging 11 markets.
• Growth environment score
19. • The demographic outlook for the
BRICs varies greatly. The differences
in the projected change in the
working-age population are very
significant in both absolute and
relative terms.
• This will impact not only economic
growth prospects, but also savings
and investment behaviour and
potentially financial market growth
prospects.
• Brazil and India are demographically
in a substantially more favourable
position than China and Russia.
• With the exception of India,
demographic developments in the
BRICs are becoming, or will soon
become, a net negative in terms of
per-capita growth.
DEMOGRAPHIC DIVEDEND
21. The rise of the middle class
• Rapid economic growth of china and India
will lead to a large middle class
• Consumption of the middle class would help
drive the BRIC’s economic development and
expansion of the global economy.
22.
23.
24. Science and technology
• Since 2002, global spending on science
R&D has increased by 45 percent to more
than $1,000 billion (one trillion) U.S.
dollars. From 2002 to 2007, China, India
and Brazil more than doubled their
spending on science research, raising
their collective share of global R&D
spending from 17 to 24 percent.
25. Research and development
• China’s development planning has targeted a
number of scientific fields and related
industries, including clean energy, green
transportation and rare earths, among others.
Since 1999, China’s spending on science R&D
has grown 20 percent annually to more than
$100 billion. By 2020, China plans to invest 2.5
percent of GDP in science research.
26. Next 11 Emerging Markets
• Goldman Sachs identified another group of
economically dynamic and promising
developing countries creatively labelled the
“Next 11” in its 2005 Economics Paper No. 134
“How Solid are the BRICs?” The Next 11
consists of a broader group of emerging
markets with the potential to play significant
roles in the global economy, including:
Bangladesh, Egypt, Indonesia, Iran, Korea,
Mexico, Nigeria, Pakistan, Philippines, Turkey
and Vietnam.
27. Growth Environment Score
• The Growth Environment Score (GES) was
introduced by Goldman Sachs in the same
paper that identified the Next 11. The GES is
an index developed to measure the extent to
which structural conditions and policy settings
in a country are conducive to transforming the
economic potential of the BRICs, Next 11 and
other countries into reality.
28. categories of economic growth
determinants:
• Macroeconomic stability – inflation, government
deficit and external debt
• Macroeconomic conditions – investment and openness
• Technological capabilities – penetration of phones, PCs
and internet
• Human capital – average years of secondary education
and life expectancy
• Political conditions – political stability, rule of law and
corruption
30. Proposals
• The officials of BRICS nations have agreed to
set up a bank with a bank capital of $50 billion
which is equally shared between all the
member countries
• Indonesia and Turkey have been mentioned as
candidates for full membership
• Egypt and Nigeria have expressed interest in
joining.
31. Criticisms
• The coverage by the mainstream media in the
BRICS summit seems to have regarded the BRIC’s
Summit as more of a failure than a success.
• BRICS nations have not unified on the world stage
• Brazil frequently raises the issue of China's
monetary policy, meanwhile India and China have
a history of fraught relations over Tibet. There
also rising concerns in South Africa that the
relationship with China is too unbalanced.
32. Conclusions
• While we come across criticisms against BRICS
nations we tend to forget that the concept is
only 5 years old
• When we talk about differences among
different member countries overlook the fact
that all these countries are
economically,socially,politically and culturally
so different.
