BRICs Share Of World Economy Up Four Times In 10 Years

[IndoCarib]

The economies of Brazil, Russia, India and China account for 20 percent of the world economic output, and rising. That’s up four fold in the last decade, according to a report released yesterday by the International Monetary Fund.

Despite the growth, problems in the core economies had made the post-2008 world a difficult one for the big four emerging markets.

Their combined stock-market value has dropped to a three-year low of 16 percent of the total invested in global equities, according to data compiled by Bloomberg . Jim O’Neill , the chairman of Goldman Sachs Asset Management who came up with the term BRIC in a November 2001 research report, said that the pull back in equity values makes BRIC market stocks “irresistible,” Bloomberg reported him saying on Wednesday. The last time the gap was this wide, in 2005, the MSCI BRIC Index jumped 53 percent in 12 months, more than double the gain in the MSCI All-Country World Index.

“Unless we are seeing a major collapse of those economies, it’s a huge opportunity for investors,” O’Neill told the newswire.

Audrey Kaplan, a fund manager at Federated InterContinental (RIMAX) said on Monday in an interview with Forbes that she had started investing in China for the first time in nearly years in the first quarter and is now overweight China and Brazil within the BRICs.

“You want to own a lot of these big names when they’re cheap,” Kaplan said about Brazil’s large cap stocks which have underperformed the local BM&F Bovespa index all year. “We’re getting back into these names because they are very attractive at their recent price levels.”

According to Bloomberg, BRIC equity value, which includes locally-traded shares and ADRs, has dropped to $7.6 trillion from $9.5 trillion a year ago, when they made up 18 percent of the global total. Petrobras (PBR), Brazil’s state run energy company, fell to the world’s 39th-largest company by value from the 10th-biggest in July 2011. China Construction Bank’s rank dropped to 20 from 12 while Rosneft , Russia’s largest oil producer, sank to 106 from 70. India’s ICICI Bank (IBN) has lost 17 percent of its market cap during the past year, compared with an average gain of 9 percent for global peers.

The long term trend of rising standards of living remains in place for the BRICs, but investors still have to contend with market volatility related to problems in the advanced economies.

Allan Conway, head of emerging markets at Schroder Investment Management, said the market still needs clarity on Europe. There’s no clear direction yet in global equities as a result.

“In 2008, we beat the MSCI emerging markets index. The period we suffered most was 2010 when the market had no clear trend. Since then we’ve clawed back and are ahead by about 300 basis points over the MSCI EM and this year as of end of June up 250 basis points over MSCI EM. The challenge for us has been to stay ahead of the curve. If we wait for some incredible plan to come out of Europe, we miss 30 percent of the rally,” he said. “The trick in the coming months are to look for the sign points that show we have moved away from kicking the can down the road and are moving to more long lasting structural changes.”

Dedicated emerging market investment funds that have a heavy weighting in the BRICs have posted 16 straight weeks of withdrawals , losing a net $5.3 billion, according to Cambridge, Mass based fund tracking firm EPFR Global.

The BRIC economies are slowing. They’ve expanded by 4.8 percent on average during the first quarter, but that’s down from nearly 7 percent last year.

BRICs Share Of World Economy Up Four Times In 10 Years - Forbes

 

[RiazHaq]

India's share of world GDP has been essentially flat in the last decade. The biggest increase has been in China's share of world GDP.

Haq's Musings: Global Power Shift Since Industrial Revolution

 

[KRAIT]

I don't see "B" and "S" of BRICS....you didn't mention anything about them as usual.

 

[Chinese-Dragon]

India's share of world GDP has been essentially flat in the last decade. The biggest increase has been in China's share of world GDP.

Haq's Musings: Global Power Shift Since Industrial Revolution

Good catch buddy.

Sometimes it is good to cut through the "rhetoric", by injecting a few facts into the argument.

 

[fly2012]

Still a long way to go considering per capita GDP. I never understood why Russia is part of this group of developing countries.

 

[RISING SUN]

BRICs share of global GDP will go up from 18% to 26% over the next decade: Arvind Subramanian
Punita Kumar Sinha: Arvind, let me start with you. Data suggests that BRICs have increased their share of global GDP threefold in the past 15 years. How much will the BRICs' share of global GDP increase over the next decade?

Arvind Subramanian: That depends very much on whether you measure it in dollar terms or in PPP terms, but regardless, over the next 10 years, the BRICs' share of world GDP will go up. In market terms, it is about 18% of GDP, which will go up to about 25-26% over the next 10 years and even to about one-third by 2030. In PPP terms, it is about 30% of world's GDP at the moment. By 2020, it will be about 37%-38% and going up to as much as 45% by about 2030. So that is a big shift.

Punita Kumar Sinha: In your book Eclipse, you have talked about the fact that China is going to become even more dominant in the next 10 years. Currently, two-thirds of the BRICs are already exposed to China. Going forward, do you think China is going to remain two-thirds of the BRICs and then what will happen to the other BRICs?

Arvind Subramanian: The short answer to where the other BRICs are going to be in this whole kind of big picture dominance game is 'nowhere' and the only country that has a chance of kind of catching up with China in this broader sense is in fact India because Russia and Brazil just do not have the demographic weight that India and China have. So, in fact, when I do these calculations for the next 20 years, Brazil and Russia figure nowhere in the top 5-6-7-8 countries.

But India in fact by 2030 will become the world's third most economically dominant country the way I measure dominance and the reason for that of course is that going forward, one would normally expect that India will grow faster than China just by virtue of the fact that India is actually poorer now than China. So, what China accomplished over the last 20-30 years, India should be able to do going forward with appropriate conditions.

Punita Kumar Sinha: That is interesting. Now Richard coming to you, the concept of BRICs seems more of an economic concept. Do you think it can translate into equity market returns?

Richard Titherington: Although the BRIC countries have been identified because of their economic importance, the financial market returns go alongside that. If you look back, the returns you have got over the last 5 or 10 years from investing in the BRIC countries have been significantly higher than they have been in developed markets. Although I expect equity markets to be volatile going forward, I think long-term returns from the BRIC countries, both in economic and stock market terms, are going to remain good.

Punita Kumar Sinha: But the BRICs have not really outperformed the other emerging markets, have they?

Richard Titherington: It depends what time period you want to start from. Obviously you can pick different time periods. Over the more recent times, the BRIC countries have underperformed. In the run up to the financial crisis when you go up to 2007, maybe there was too much emphasis on the BRIC countries and I certainly think that investors in emerging markets should look more broadly than just investing in the big four. In many other countries, Korea is probably quite a good example of this. There are many companies that benefit from the economic growth story of the big four BRIC countries.

 

[Chinese-Dragon]

But India in fact by 2030 will become the world's third most economically dominant country the way I measure dominance and the reason for that of course is that going forward, one would normally expect that India will grow faster than China just by virtue of the fact that India is actually poorer now than China. So, what China accomplished over the last 20-30 years, India should be able to do going forward with appropriate conditions.

You would think so.

But it hasn't really turned out that way at all.

 

[phylumchordata]

You would think so.

But it hasn't really turned out that way at all.

better than bubbly dubbly virtual gdp of chinese economy...

 

[AViet]

So funny. Indian (not only in this forum, but even government officials) badmouthing China all the times, but whenever they need to put India in high position in world stage, they bracket themselves with China, in whatever things which could be bracketed, like innovation, science, economy, market.

If bracketed with China, any country can be like "Ethiopia and China GDP combined more than half of US GDP" or "Kenya and China automobile market combined is bigger than US" and so on.

 

[Kyusuibu Honbu]

So funny. Indian (not only in this forum, but even government officials) badmouthing China all the times,

When did Indian Govt officials bad mouth China?

but whenever they need to put India in high position in world stage, they bracket themselves with China, in whatever things which could be bracketed, like innovation, science, economy, market.

When did India bracket itself with China "in whatever things which could be bracketed, like innovation, science, economy, market." ?

If bracketed with China, any country can be like "Ethiopia and China GDP combined more than half of US GDP" or "Kenya and China automobile market combined is bigger than US" and so on.

Besides the topic here is about BRIC, not only India and China?

So hilarious that Indo-phobic tendencies get the best of many CCs here, before common sense.

 

[Hello_10]

there is one more reason, that is, US+EU economy grew by almost nil by last 5 years. first develop economy can't grow like a developing economy, and second they are just borrowing to pay for the pensioners/Welfare etc which is increasing their debt limit. even in worse case, Pakistan type developing economy would register 5% growth on long term so even if it has high debt, its economic size will definitely be very high after 20-30 years. but average growth rate of a develop economy is assumed to be around 2% only, as during 70s, 80s, 90s, till mid last decade. but if we have a look on how emerging economy, mainly China has taken a big share in export business of OECD economies, its not wise to say that UK type economy would ever have its per capita income as early 2008, not for at least till 2050 in fact, with my knowledge in economics and the way these so called 'industrialized' economies have lost their industries to China till now, I may predict that these developed economy based on services only will get total collapsed till 2020....

like the graph as below, population growth rate of US is around 0.9% per year and hence there might be around 4% more people in US by mid 2012, as compare to early 2008. and even if its economy is now around 2% higher than its peak of early 2008, per capita income on real term would be around 2% less than its peak of early 2008 this way, on PPP term adjusting inflation. but US is still better than UK whose per capita income is around 7.5% less than its peak of early 2008, as its GDP on real term is now 5% less and population 2.5% more by last 4.5 years due to its 0.6% annual growth in population..........

but the worse thing about both of these two economy is, Public Debt level of US was around 70% in early 2008 but now its 105% and that of Uk was around 50% in early 2008 while now its 86% at the end of 2011. hence, these two economies are only borrowing to pay for the expanses/bail-outs but still they are on a slow pace of decline....

while even if GDP growth rate of India was the slowest last year, than for last over 10 years, it was still on 6.5% ......

Britain is losing the economic Olympics
As London prepares for another display of British pageantry and good humor to match the unlikely triumph of last month’s rain-sodden Royal Jubilee, a less impressive aspect of Britain’s stoical “stiff upper lip” may detract from the national pride associated with hosting the Olympics. In the global race out of recession, Britain has just been revealed as a prime contender for the wooden spoon.

Not only was the shocking drop of 0.7 percent in Britain’s second-quarter GDP reported on Wednesday much bigger than investors and independent economists had expected but it almost matched the 0.8 percent fall in Italy’s GDP the previous quarter. And that Italian drop holds the record for the biggest quarterly contraction suffered by any G7 country since the immediate aftermath of the Lehman crisis. Much more important than such statistical trivia is the fact that Britain’s economic output is still 4.5 percent below the peak level it reached in the first quarter of 2008, more than four years ago. The U.S. and German economies, by contrast, are now significantly bigger than they were before the crisis and, in this sense at least, have left the recession behind them. And even the euro zone as a whole, despite the severity of its financial crisis, has done much better than Britain, with GDP just 2 percent below its peak in 2008.

National economic performance is not, of course, a competitive Olympic sport, and there is more to economic success than GDP growth. Still, there is a good reason for connecting the Olympics with economics: International competitions and comparisons can teach useful lessons and create incentives to improve economic management.

The most instructive international comparison at present is between the British and American efforts to clamber out of recession and financial crisis. This race is about as close as economics can get to a controlled experiment of the kind favored by natural scientists, in which sharply different policies are applied to two countries with broadly similar structures and initial conditions, facing similar economic problems.

In 2008, the U.S. and Britain were two advanced economies with large financial sectors, dangerous housing bubbles, heavy consumer debt and similar government deficits and debt levels relative to GDP. Both suffered extremely severe banking crises that forced their governments to take on huge additional liabilities by guaranteeing their biggest banks. For two years after the Lehman crisis in September 2008, the two economies followed broadly similar policies: slashing interest rates to zero, allowing large expansions of their budget deficits and financing the resulting debt with newly printed money. The two economies moved closely in tandem, as economic theory would have predicted: both on the way down until mid-2009 and then on the way up until mid-2010.

But then, in the summer of 2010, the newly elected British government set a radically different course for one very specific and controversial aspect of economic policy – government borrowing. Instead of simply tolerating the big budget deficits that had resulted from weak economic growth, as both the U.S. and British Treasuries had done until 2010, David Cameron decided his top priority would be to reduce government borrowing. He planned to do this by slashing public spending and imposing substantially higher tax rates. The U.S. government, meanwhile, continued with a fiscal policy of benign neglect. Despite all the sound and fury in Washington about deficits and debt limits, U.S. tax rates and public spending plans remained broadly unchanged through 2011 and 2012, with a small cut in payroll taxes largely offsetting the fiscal impact of cuts in local government spending and employment. In all other respects conditions in the two economies remained unchanged. Both central banks continued to print money and to keep interest rates near zero. The dollar and the pound moved very little against one another, and exports grew moderately in both countries, despite the crisis in the euro zone. In short, this really was a controlled experiment on the impact of different fiscal policies.

Curiously enough, the two economies began to diverge from the moment this controlled experiment started, with the British economy contracting in the third quarter of 2010, while growth accelerated in the U.S. In the period since then, the U.S. economy has expanded by 2.7 percent, while Britain has contracted by 0.8 percent. The latest results of this experiment will be revealed on Friday, when the U.S. GDP figures are published and can be compared with the 0.8 percent fall in British GDP just announced.

It may be said, of course, that the British policy of fiscal consolidation was still justified, even if the U.S. enjoys much stronger growth, as it almost surely will. After all, controlling public debt and deficits is an important national objective that counts for more than simply juicing up short-term growth.

But this is where we get to the really significant and surprising feature of the race out of recession. Britain’s heroic spending cuts and tax increases imposed by the Cameron government may contrast starkly with lassitude and cowardice displayed by politicians in Washington. But this dramatic political contrast has made absolutely no difference on the debt and borrowing outcomes the two countries have actually achieved, because the British austerity has simply prolonged recession, while U.S. fiscal laxity has allowed the economy to grow. According to the latest IMF figures, published two weeks ago, the U.S. budget deficit has been reduced from 10.5 percent of GDP in 2010 to 8.2 percent in 2012. This reduction is a slightly bigger reduction in the deficit than Britain has managed to achieve in the same period – from 9.8 percent to 8.1 percent.

In short, any country determined to control public borrowing should forget about fiscal austerity and instead do everything to grow as fast as it can – a fitting economic message from Olympic Britain.

Britain is losing the economic Olympics | Anatole Kaletsky

Debt/GDP ratio of Countries till end 2011

United Kingdom 85.7 2011 est.

United States 104.1 2011 est.

List of countries by public debt - Wikipedia, the free encyclopedia

 

[IndoCarib]

India's Share in world GDP in the last decade. This is for Riaz Haq & chinese dragon who obviously cant read graphs !

year / current prices / PPP

1990 / 1.5% / 3.2%
2000 / 1.5% / 3.7%
2005 / 1.8% / 4.3%
2010 / 2.6% / 5.5%


http://budget.myiris.com/uploads/2012/ES_ThuMar2012132107.pdf

 

[Zulkarneyn]

India's Share in world GDP in the last decade. This is for Riaz Haq & chinese dragon who obviously cant read graphs !

year / current prices / PPP

1990 / 1.5% / 3.2%
2000 / 1.5% / 3.7%
2005 / 1.8% / 4.3%
2010 / 2.6% / 5.5%


http://budget.myiris.com/uploads/2012/ES_ThuMar2012132107.pdf

Almost doubled in 20 years. Not bad when considering emerging giants' share like China and Brazil

 

[Hello_10]

India's Share in world GDP in the last decade. This is for Riaz Haq & chinese dragon who obviously cant read graphs !

year / current prices / PPP

1990 / 1.5% / 3.2%
2000 / 1.5% / 3.7%
2005 / 1.8% / 4.3%
2010 / 2.6% / 5.5%


http://budget.myiris.com/uploads/2012/ES_ThuMar2012132107.pdf

one more news for you. the method to measure GDP on PPP, which was applicable till 2006, used to consider estimated 'undocumented' part of GDP also, like the news as below. and as per that old method of measuring GDP on PPP, GDP at PPP of India was aleady $5.16tn by 2006. and if we consider average growth rate of India as 8.6% during last 6 years then we may say that GDP on PPP of India would be around $8.0tn by end of 2011, means having around 8% share in world economy by 2011.

(as per the old method, share of 'Undocumented Part' in GDP at PPP was around 60% to 80% for "overly populated developing countries". but it was around 10% higher only for the Middle Order countries like Brazil, Turkey and only 0% to 1% difference for the 'developed' economies. I remember it as I used to have a close look on the economic data's since 1990..

for 2005, India's GDP at PPP is estimated at $ 5.16 trillion or $ 3.19 trillion depending on whether the old or new conversion factor is used

It's official: India's a trillion-$ economy - Times Of India

India GDP Annual Growth Rate

 

[Hello_10]

You would think so.

But it hasn't really turned out that way at all.

sir, the Natural Economic Order of World is as below, and it can be changed only when different wars are orgaized, like how Western Nations organized different wars in 19th century and changed this economic ranking. and for Indians, I said many times, "China will always share the top two economic spot with India like till 18th century, or, both will come down together like since 19th century after different Western organized wars." and if CHina may achieve highest economic size like in 16th and 18th centuries, then India will simply replace China to second spot, how Indian economy was on the top till 17th century, excluding the 16th century, as below: (we just want the China to remove Western Hurdles for India. then think, Indians here want China to go up or go down?????????)

List of regions by past GDP (PPP) - Wikipedia, the free encyclopedia


(US/West simply dont recognize territories of those countries who dont follow Western orders and if India gives them space in India then it simply means you want to help these Western Champions to get their work done in India. I always told to the government agencies of India/Diplomats, "you know they dont recognize your state until you follow them, then if you give them space in India then it simply means that you want to help them in breaking down your 'State' by buying all the corrupts of India....."

India would only stick with the norms of WTO and keep fcuking those Western B@astards who only want to harm India. even on the trade side, India suffer heavy Trade Deficit with EU while Indian Software companies provides them the best projects for the least price with paying very high tax to US government also. just keep kicking those b@stards who only look for the ways to harm India.....)

India's exports to European countries increased by about 16 per cent to USD 57.7 billion in 2011-12, while imports rose by about 29 per cent year-on-year to USD 91.5 billion.

Exports to Europe up 16%; imports 29%