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BRIC countries (Brazil, Russia, India and China): A new global order emerging!
By Amarendra Bhushan for CEOWORLD Magazine Updated:June 8, 2009
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As the US economy, the consumer and the financial sectors flounder, and as much of Europe follows suit, the emerging economies and markets are getting on with global trade, business and finance.
India has stressed the need for the four-nation grouping, BRIC, comprising Brazil, Russia, India and China, to strengthen their bilateral relationships that will help them to be more effective collectively.
BRIC accounts for 40 percent of the world’s population, 25.9 percent of its total geographic area, and 40 percent of global Gross Domestic Product (GDP).
According to leading global investment banking and securities firm, Goldman Sachs, BRIC can become collectively bigger than the G7 by 2035.
Jim O’Neill, chief economist at Goldman Sachs, expects China and India to grow strongly this year in defiance of recession in most rich nations. Vikram Pandit, chief executive of Citigroup, on Friday also talked up Russia’s prospects. “China, India and Russia [will] become the engine of world growth”
Nigel Rendell, senior emerging markets strategist at RBC Capital Markets, said: “The emerging markets are a geared play on the developed world. If you look at the main emerging economies, it is only really China and India that are continuing to grow strongly.”
The Indian Nifty stock index has jumped by 64% in the past three months. China’s CSI 300 index of shares in Shanghai and Shenzhen has risen 37% and Brazil’s Bovespa increased 41%.
On June 16, at Brazil’s urging, BRIC leaders will meet in Russia to discuss an ambitious agenda: overhauling the international financial system, enlarging the United Nations Security Council and dumping the dollar as the world’s reserve currency.
The BRIC nations, Brazil, Russia, India and China are flooded with billions of dollars in their economies as stimuli to come out of the recession. In India, Foreign Institutional Investors (FIIs) poured $1.3 billion into Indian equities. They poured another $1.87 billion in the first half of May, before the election result. For May as a whole, the inflow was $4.14 billion, a billion a week.
Deutsche Bank Research says the “rise of the BRICs” thesis has received much criticism – some of it deserved, some of it undeserved. There is little doubt that major change is afoot, but the thesis is somewhat misleading, even deceiving, as it discounts what will be the most momentous development of the first half of the 21st century: the rise of the Chinese and Indian economy.
However, for international business and trade purposes, the four countries are vastly different. For example, Brazil (e.g., soil, iron ore) and Russia (e.g., oil, natural gas) will become dominant in the world economy as suppliers of raw materials while India and China will be prosperous global suppliers of manufactured products and services.
Grouping the four, however, obscures a simple fact: while the rise of China and India represents a real shift in the power balance, Russia and Brazil are marginal economies propped up by high commodity prices.
Chinese officials, are committed to developing 100 world-class universities, with a focus on science and engineering; India boasts one of the most dynamic information technology sectors outside the US.
The fortunes of the world economy over the next decade depend on what happens in the BRIC countries: Brazil, Russia, India and China. All with large populations and hungry for growth.
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