Welcome to a future built in BRICs – by Jim O’Neill (The Telegraph – November 19, 2011)

Jim O’Neill, creator of the acronym BRICs 10 years ago, is positive on the prospects of the BRIC economies but also of other “growth” markets such as Turkey and Mexico. He talks to Tracy Corrigan, Editor-in-Chief of The Wall Street Journal Europe. (January 9, 2012)

This article below is from (United Kingdom) The Telegraph: http://www.telegraph.co.uk/

Extracted from Jim O’Neill new book “The Growth Map Economic Opportunity in the BRICs and Beyond.”

After 10 years of emerging market growth it is time for a new world order – with the BRICs taking their rightful place at the top table , says economist Jim O’Neill in an extract from ‘The Growth Map: Economic Opportunity in the BRICs and Beyond’.

In 2001, I wrote a research paper in Goldman Sachs’s Global Economics series that examined the relationship between the world’s leading economies and some of the larger emerging market economies.

I thought the global economy in the coming decades would be propelled by the growth of four populous and economically ambitious countries: Brazil, Russia, India and China, and I coined the acronym BRIC from their initials to describe them.

Since then my career has been shaped in large part by that single term. Even then I had stopped thinking of these four economies as traditional emerging markets. Ten years later I am even more eager to convince the world that they, along with some other rising stars, are the growth engines of the world economy, today and in the future.

When the credit crisis erupted in September 2008, many predicted that the BRIC story was over. There were moments I worried about that too.

In the immediate aftermath, BRIC equity markets fell more than those of their developed cousins and it did seem as though global trade might suffer permanent scars.
Of course, this fear turned out to be completely unfounded.

In some ways that is when the BRIC thesis really came of age. It withstood the shakings of the world’s economic foundations, and emerged more robust than ever.

My paper did not cause an immediate splash and its main points were not seen as especially profound at the time.

Based on my analysis of global GDP, I wrote that Brazil, Russia, India and China, which then controlled 8pc of the world GDP, would see their share of the world economy grow significantly in the next decade.

I noted that China’s GDP was already bigger than that of Italy, which was a well-entrenched member of the G7 group of economic superpowers, and over the decade ahead it would start to overtake a number of the other G7 members.

Over the next 10 years, I predicted that the weight of the BRICs – and especially China – in world GDP would grow quite markedly. The world would have to pay attention.

I predicted that Brazil, given highly favourable but what then appeared to be very unlikely conditions, could by 2011 increase its GDP to “not far behind Italy”.

Brazil’s GDP overtook Italy’s in 2010, making it the seventh-largest economy in the world, with a GDP of around $2.1 trillion (£1.3 trillion).

The other three BRICs have made similarly impressive progress. In the first two months of 2011, for example, we learnt that China’s economy had overtaken Japan’s as the world’s second largest; IndiGO, a little-known low-cost Indian airline, had ordered 180 A320s, making it two-thirds the size of Europe’s long-established easyJet; and Russia had become Europe’s largest car sales market.

All four of the BRIC countries have exceeded the expectations I had of them back in 2001.

Looking back, those earliest predictions, shocking to some at the time, now seem rather conservative.

The aggregate GDP of the BRIC countries has close to quadrupled since 2001, from around $3 trillion to between $11 trillion and $12 trillion.

The world economy has doubled in size since 2001, and a third of that growth has come from the BRICs. Their combined GDP increase was more than twice that of the United States and it was equivalent to the creation of another new Japan plus one Germany, or five United Kingdoms, in the space of a single decade.

Some observers say the effect of the BRICs on the world economy has been exaggerated because their growth was primarily driven by exports to the developed markets, as well as the rise in commodity prices.

For the rest of this article, please go to The Telegraph’s website: http://www.telegraph.co.uk/finance/financialcrisis/8900851/Jim-ONeill-Welcome-to-a-future-built-in-BRICs.html