Spotlight on BRICS

The financial acronym BRIC - which means Brazil, Russia, India and China - was coined in 2001 by Jim O'Neil, chairman of Goldman Sachs Asset Management (GSAM), who wrote a paper entitled “Building Better Global Economic BRICs”. In that document, O’Neil suggested economists and investors should pay more attention to the four larger emerging market economies which would have a faster GDP growth rate higher compared to the G7 countries. According to him, BRIC economies have the potential to transform the global economy over the coming decades and will overtake G7 economies by 2027. Last year, South Africa was added to the acronym forming the BRICS. 

What does make these countries so special? First of all, their size and population which means more consumers and investments to support the growth consumption. The four original countries in the acronym, combined, have more than a quarter of the world's land area and more than 40% of the world's population Secondly, especially in terms of Brazil, China and South Africa, they are big commodities producers, while Russia is a huge oil producer. India, on the other hand, has its economy basis more concentrated in technology. 

Besides that BRICS countries have all the necessary conditions to sustain high growth rates since the economic interaction between these nations has been increasing. India and China have been acting as a kind of the engines of growth which means they are demanding more commodities and energy. On the other hand, Brazil, South Africa and Russia supply China and India needs which results in a virtue circle. So, Brazil has seen as the commodities warehouse, as South Africa, however in lesser extend; Russia, the energy store; India is the service centre; and China the trading giant. 

According to the chairman of Goldman Sachs Asset Management (GSAM), BRICS can represent close to 40% of global GDP by 2050 and have become four of the world’s top five economies.


Mariana Monteiro da Silva said...

Parabéns pelo blog!

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