Thursday, March 31, 2011

Goldman Sachs O'Neill: BRICS are No Longer "Emerging"; Will Surpass U.S. And G7

Jim O'Neill, president of asset management at Goldman Sachs in Britain, says that the four countries known as BRIC - Brazil, Russia, India and China - have already left behind the status of emerging economies and must be viewed as a separate category, pointing out that China is already the second largest economy in the world and Brazil, the 7th.

"It is increasingly clear to me that referring to the four BRIC nations as 'emerging' makes no sense,"

"The BRIC countries, along with some other countries, they deserve a status different from many others that can be properly classified as emerging markets."

Goldman Sachs recently reclassified the four countries as "growth markets".

This category would also South Korea, Indonesia, Mexico and Turkey - however, these are "too far" from the BRIC in terms of economic importance, Jim O'Neill wrote in the Financial Times.

It was O'Neil who coined the term BRICs to highlight the economic strength of the four major emerging at the turn of the century. But since then the pace of growth in these countries has exceeded expectations.

The projection is that the size of the BRIC surpass the G7 - the group of industrialized countries of the world - around 2027, about ten years ahead of schedule, says O'Neill.

In the article, he highlights the case of Brazil, which became the seventh largest economy in the world "about ten years earlier than I thought."

By the end of this decade, the BRIC countries should achieve a combined GDP of U.S. $ 25 trillion, compared with about $ 11 trillion today, and about $ 3 trillion at the beginning of the century, O'Neill said.

"At some point this decade, together they will overcome the United States. My guess is that this could happen around 2017-2018."

The economist says being reclassified as "growth markets" does not imply that Brazil, Russia, India and China "will grow every year."

"They grow in cycles, like everyone else. What we want with this is to indicate that, as the global economy continues crawling in this decade, their proportion in the overall GDP should increase."

(from O Estado de Sao Paulo.)

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