BRICS’ Prospects Look Bright – OpEd

By Polina Chernitsa

According to a recent report by Goldman Sachs, Brazil, Russia, India, and China will soon enter the top five of the leading world economies. The report was released to coincide with the 10th anniversary since the emergence of the BRIC acronym and it did not take into account the economic figures of South Africa.

It is quite symbolic that the report was made by the colleagues of economist Jim O’Neil who introduced the BRIC acronym that stands for Brazil, Russia, India, and China, four of the most rapidly developing countries. In the spring of 2011 South Africa joined the four countries but it is not mentioned in the report. Goldman Sachs’ analysts note that since 2001 BRIC countries have recommended themselves as the leaders of the economic growth contributing between 11% and 25% to global GDP. In terms of GDP growth rate some developing countries are already ahead of the leading economies, economist Maxim Bratersky said in an interview with the “Voice of Russia”.

“As for GDP growth Brazil is far ahead of Great Britain and by 2020 it is to rank four among the developed countries. The first troika (top three) will be the same but China and the US will swap places. Russia will be somewhere near them.”

According to the report, the share of BRICS countries in the global growth has also increased to 50% from 25%. But this is where the good news end, Goldman Sachs’ analysts note. The coming years will see a slowdown in the economic growth, while production costs in BRICS countries will continue to grow. The euro-zone crisis will restrict the sales area, which leads to the outflow of investors, the report read. This approach does not reflect the whole picture, financial analyst Roman Andeyev says.

“Indeed, there are forecasts for the economic growth’s slowdown in China but in Brazil everything is fine. Let’s assume that Russia and India have a good potential, favorable start positions, low level of debt and no economic “bubbles”. The industrial growth is likely to slow down which is explained by the common stagnation in the world but speaking about economic growth I still don’t see any adequate competitors to BRICS.”

Russia’s entry to the World Trade Organization (WTO) and its participation in other integration projects may raise BRIC’s potential, experts say. However it possible only in case of further diversification of production and deviation from the economy model based on raw materials, Maxim Bratersky says.

“It is hard to imagine that amid the expected decline in prices on raw materials Russia will be able to keep a high rate of growth but in any case the growth rate will be much higher than in Europe. Russia’s entry to the WTO will help it to become part of the technological chain of division of labor. The formation of the Eurasian Union’s single economic space of is even more important. It will be a gigantic economic system with huge potential.”

According to Goldman Sachs report the coming years see more intensive investments in the economies of BRIC, (or BRICS which is now already not so relevant), because such investments will be regarded as reliable and promising.