Friday, 26 July 2013
BRICs: Then and Now - An Emerging Markets Timeline
A recent article in The Economist regarding emerging markets, and more specifically the BRICs, caught my attention. BRICs is an acronym used for the 4 major emerging markets - Brazil, Russia, India and China (South Africa was added in 2010, it is now known as 'BRICS'). All 4 of these nations are newly industrialised, developing economies who share a common, rapidly expanding national economy.
As can be seen from this World Bank graph, the four economies have consistently posted growth rates well in excess of that set by the USA in the last 10 years (ignoring 2009 'financial crisis effect year', everyone suffered) up until this year. Brazil has dipped below the growth rate of the USA whilst the other 3 are falling. The turning point, potentially. The four economies have reached a point of maturity. The gap between themselves and the world leader that existed 20 years ago has been wiped out by the rapid progress, leaving no more room for this 'catch-up growth'. Coupled with this, each of the economies have their own individual problems that are hindering them from carrying on this progress - China's ageing population and India's need for reform, for example. Although we can't exactly call this slowdown a failure in economic terms, it does pose a problem for the economies.
For the most part of my life (or what I can remember of it) emerging markets and their rapid expansion has been one of the dominating stories, consistently cropping up in the media. Now the sense is that this era has come to an end. The days of the rapid economic expansion seen by the BRICS over recent decades are drawing to a close. Take China as an example, it's growth rate was 7.8% in 2012, half of the level it achieved back in 2007. China is also struggling to reached its 7.5% forecasted GDP growth for 2013 which would be the lowest growth rate the country has seen in 23 years.
The consensus is that the world will not be seeing growth rates well into the double figures like China posted in the mid 2000's ever again.
With this thought in mind, I thought it would be fitting to do a researched piece on the BRICS, looking at where they have come from in the last few decades and what has been the cause of this slowdown. I'll do this over a 5 part blog post, with each country being looked at in detail and then a conclusion at the end - so stay tuned for that.