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    Bric - Executive Summary

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    Radhika Arora
    Goldman Sachs coined the term "BRIC" in 2001 to refer collectively to the emerging economies of Brazil, Russia, India, and China. They predicted that by 2050, the combined economies of the BRIC nations could surpass those of the richest current countries. By 2000, the BRIC economies already comprised 23.3% of global GDP. While GDP growth in the BRICs has largely outpaced developed nations in the past decade, more recently their stock market performance has only matched or underperformed the US market. There remains potential for continued strong GDP growth in the BRICs through 2020 and beyond, but the term is not universally accepted due to China's dominance among them and a lack of synergies between

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    Bric - Executive Summary

    Uploaded by

    Radhika Arora
    76 views2 pages
    Goldman Sachs coined the term "BRIC" in 2001 to refer collectively to the emerging economies of Brazil, Russia, India, and China. They predicted that by 2050, the combined economies of the BRIC nations could surpass those of the richest current countries. By 2000, the BRIC economies already comprised 23.3% of global GDP. While GDP growth in the BRICs has largely outpaced developed nations in the past decade, more recently their stock market performance has only matched or underperformed the US market. There remains potential for continued strong GDP growth in the BRICs through 2020 and beyond, but the term is not universally accepted due to China's dominance among them and a lack of synergies between

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    Goldman Sachs coined the term "BRIC" in 2001 to refer collectively to the emerging economies of Brazil, Russia, India, and China. They predicted that by 2050, the combined economies of the BRIC nations could surpass those of the richest current countries. By 2000, the BRIC economies already comprised 23.3% of global GDP. While GDP growth in the BRICs has largely outpaced developed nations in the past decade, more recently their stock market performance has only matched or underperformed the US market. There remains potential for continued strong GDP growth in the BRICs through 2020 and beyond, but the term is not universally accepted due to China's dominance among them and a lack of synergies between

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    76 views2 pages

    Bric - Executive Summary

    Uploaded by

    Radhika Arora
    Goldman Sachs coined the term "BRIC" in 2001 to refer collectively to the emerging economies of Brazil, Russia, India, and China. They predicted that by 2050, the combined economies of the BRIC nations could surpass those of the richest current countries. By 2000, the BRIC economies already comprised 23.3% of global GDP. While GDP growth in the BRICs has largely outpaced developed nations in the past decade, more recently their stock market performance has only matched or underperformed the US market. There remains potential for continued strong GDP growth in the BRICs through 2020 and beyond, but the term is not universally accepted due to China's dominance among them and a lack of synergies between

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    EXECUTIVE SUMMARY

    Brazil, Russia, India and China, the four giants among the emerging markets, are so medial to the
    outlook and prospects of the global economy that they have received the accolade of being
    referred to as the BRIC nations together, which today is not just an acronym but a status. Ever
    since investment bank Goldman Sachs christened this upcoming power bloc in its paper
    Building better global economies BRICs in November 2001, theyve been at the forefront of
    thinking on the subject, resulting in a regular stream of reports including How solid are the
    BRICs? (November 2005), BRICs lead to global recovery (May 2009) and the recent report
    of 2011 which does not portray their original sentiments that strongly about BRIC.
    Goldman Sachs has argued that since the four BRIC countries are developing rapidly, by 2050
    their combined economies could eclipse the combined economies of the current richest countries
    of the world. A paper published by Goldman Sachs discussed the state of the world economy
    with particular emphasis on the relationship between the G7 and some of the larger emerging
    market economies.
    On a PPP basis, the aggregate size of the BRICs was about 23.3% of world GDP at the
    end of 2000, somewhat higher than both Euro land and Japan.
    Whilst on a current GDP basis, the size of the BRICs was just under 8%, which was also
    set to rise.
    Some of these countries were already bigger than some individual G7 economies; China,
    at 3.6% of world GDP (using current US$ prices), was slightly bigger than Italy at the
    end of 2000, and notably larger than Canada.
    According to the progress report of June 2011, Infrastructure in the BRICs has improved notably
    in recent years, but still remains far behind developed country norms. Infrastructure investment
    will need to accelerate in the years ahead to prevent it from constraining future growth rates in
    the BRICs. While recent large-scale plans from the BRIC governments are encouraging in this
    regard, they will need to do more to attract private investment as well. And the market sentiments
    have indeed been in alliance with the forecasts.
    Mutual funds, hedge funds, ETFs, indexes, future, options and a host of other investing
    instruments mushroomed to take advantage of the rapid growth in these economies. Many
    companies that operate in these countries listed their stocks in the New York Stock Exchange as
    well, in search of a wider pool of investors and investment dollars. During the global economic
    recovery phase (2009), among the top-five performers of the year, three were BRIC funds
    those investing only in the emerging economies of Brazil, Russia, India and China. Thus, there
    have been giddy-ups (Brazils stock market up 97% in 2003) and downs (Russias bourse down
    72% in 2008), but overall, the trend line for the first decade of the 21st century pretty much
    played out the way ONeill expected: outsized growth among the BRICs.
    Of late, the BRICs stock indices have generally just matched or even underperformed the U.S.
    market, though investors who place their bets in accord with macro-economic, political, and
    social trends are mostly still comfortable with the proposition that the BRICs are likely to
    continue to outperform in terms of GDP growth at least between now and 2020 and probably

    beyond, analysts suggest better portfolios including other emerging economies like South Korea
    & Mexico.
    Apart from the slow growth of BRIC, stemming from internal politics, high inflation rates, overreliance on commodities etc., the term is not also universally accepted crediting to the
    disproportionate importance of China, absence of other large emerging markets, lack of the
    synergies so essential to merge them together. According to analysts, all that the four countries
    share in common is their continental geographic scale and large economic size.
    What is not to doubt is the ambition of the people of Brazil, Russia, India and China to achieve a
    similar level of wealth to that of, for example, the US and Western Europe and this is very much
    helping to drive their economies forward.

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