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On 10th birthday, BRICs poised for more growth - The Globe and Mail

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Passers-by enjoy a Christmas decoration in downtown Sao Paulo on Dec. 7, 2011. Brazil has the potential to be among the top five global economies by 2050, according to Goldman Sachs.

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On 10th birthday, BRICs poised for more growth

tavia grant

Globe and Mail Blog
Posted on Thursday, December 8, 2011 6:44AM EST
3 comments

Happy 10th birthday, BRICs.

It was a decade ago that Jim O'Neill, then head of economic research for Goldman Sachs, coined the term to describe four of the world's fastest-growing, most dynamic economies that he believed would reshape the global economy: Brazil, Russia, India and China.

Since then, others have scrambled to create catchy emerging-market phrases of their own. The CIVETS refer to Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. The BRICS add South Africa into the mix. The E7 tacks on Mexico, Indonesia and Turkey to the BRICs.

And now Goldman speaks of the N-11 -- the next 11 emerging economies that will drive global growth (are you ready for it? Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam).

On the occasion of its anniversary, Goldman Sachs has studied how the BRICs have fared over the past decade. “Over that period, the rise of the BRICs and the emerging world has been one of the defining stories of the era,” it notes in a report this week. “The world's centre of economic gravity will continue to move in favour of the BRICs -- and significantly so.”

Here are some of its findings, and updated predictions:

  • The huge shift the bank had predicted 10 years ago has happened much more rapidly than it expected.
  • The BRICs have moved from 11 per cent of GDP in 1990 to about 25 per cent today. By 2050, that's expected to be almost 40 per cent of global GDP.
  • China will overtake the U.S. by 2050, becoming the world's largest economy as measured by GDP.
  • All four BRICs still have the potential to be among the world's top five economies by 2050. But even bigger drivers will be elsewhere -- namely the N-11 nations and other emerging markets.
  • The next decade will be a peak for global growth; after that, demographics and other factors will slow the pace of expansion.

The BRICs may be a zingy term to describe common traits among the four countries. But it might also mask their deeply different stories.

Reflecting on the last decade, Mr. O'Neill, now chairman of Goldman Sachs Asset Management, acknowledged they haven't all developed at the same pace. And he singled out one in particular as lagging in terms of productivity, foreign direct investment and reform.

“All four countries have become bigger than I said they were going to be, even Russia,” he said at a London summit this week. “However, there are important structural issues about all four, and as we go into the 10-year anniversary, in some ways, India is the most disappointing.”

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