Jim O’Neill, global economist at Goldman Sachs, coined the term BRIC countries in 2001 and argued that the economic potentials of the emerging markets of Brazil, Russia, India, and China are immense in the decades to come. These countries cover 25 percent of the world’s land mass, 40 percent of the world’s population, and are increasingly run as global market economies.
Between 2002 and 2007, annual GDP growth averaged 3.7 percent in Brazil, 6.9 percent in Russia, 7.9 percent in India, and 10.4 percent in China. Popular predictions have the combined economies of the four BRIC countries outstripping that of the G7 countries (Canada, France, Germany, Italy, Japan, UK, and the U.S.) within the next couple of decades.
Less Impacted by an Economic Downturn . The four BRIC countries will also be less impacted by a global economic downturn. It is true that demand for products from Brazil and China will be weaker, that India’s service sector could suffer, and that Russia’s heavy reliance on the hydrocarbon sector will potentially bit hit by falling energy prices. But the positives in these economies far outweigh the negatives. For example, the BRIC countries have large surpluses in international trade as well as reserves in foreign currency that create a buffer in economic downturns.
The BRIC countries’ governments are likely to use the reserves to increase spending which should result in increased consumer confidence and demand. In fact, an economic crisis globally is likely to remove potential inflation problems in the BRIC countries. The result is easing of interest rates and even more economic growth.