With the G20 summit underway in China, leaders representing twenty major economies from around the world have gathered to discuss key economic and financial policies.
While all summit participants significantly contribute in shaping global financial stability, four of these countries—Brazil, Russia, India, and China, have been recognized as among the world’s most powerful emerging economies. Acknowledging their robust economic potential, these countries have been elegantly coined as “BRIC.”
The following analysis examines whether these countries have lived up to their economic promise, and the roles they can be expected to play in the decades to come.
Brazil
Brazil’s progress in climbing the world economic charts has not been an easy one. After facing the tumultuous impeachment of Dilma Rousseff, Brazil now faces its next largest issue: a burdened and collapsing economy. With surging unemployment rates and a quickly receding GDP, Brazilians are wary of the future. However, there are signs that the country can slowly head towards the road to recovery. The IMF reported in late July that Brazil had a better outlook than the organization originally predicted for the coming year, and posited that the country could realistically expect market growth by 2018. Furthermore, the incoming president, Michel Temer, has promised wide reforms and aggressive plans to bolster the economy, including privatizing more state-owned firms, reducing the budget deficit, and attracting new sources of foreign investment.
Overall, although Brazil isn’t currently living up to expected “BRIC” standards, time will tell whether the new administration and its ambitious goals can provide respite for the country’s troubled state of affairs.
Russia
The Russian state has steadily grown to become a global powerhouse. President Vladimir Putin’s leadership has allowed Russia to boast significant economic diversification and foreign investment, promoting a booming economy over the past two decades. However, this growth has quickly stagnated in the last few years, as Putin’s focus has slowly shifted away from domestic affairs. Putin’s aggressive foreign policy (see: annexation of Crimea, involvement in the Middle East, strained trade relationships with the West), has only resulted in the amplification of US and European Union Sanctions. Furthermore, with the significant downturn in global crude prices, the Russian economy has taken a substantial hit, as the energy sector accounts for 70% of the nation’s export revenue.
However, one cannot forget the resolve of Putin, and his commitment to Russia’s leadership in the global community. In addition to aggressively assembling task forces and teams to combat the recession-like symptoms, Putin hopes to attract back foreign investment, and is gambling heavily on the rise of crude prices to return Russia to its once coveted position.
India
The Indian economy has grown to become one of the largest and quickly accelerating free-markets in the world. Thanks in large part to significant IT outsourcing, and a rise in diversified manufacturing initiatives, the economy continues to be a promising source for foreign investment.
However, a major concern for the government is the quickly inflating housing bubble. Due to booming population and increasing NRI (non-resident Indian) clientele, real-estate developers aggressively over-estimated demand, leading to a market surplus of inventory. In tandem with housing sales being at all-time lows, builders are concerned of an eventual housing market crash. Additionally, unrelated to the housing crisis, Prime Minister Modi is still pursuing aggressive policies to mitigate various other economic weaknesses, including: consolidating aged banking systems (most of which used to be state run), fostering a culture to promote domestic small-business growth and grassroots innovation, and most importantly, fight inflation.
Overall, India still seems a worthy proposition for the international community to invest in. Though the country does have a slew of obstacles to tackle in the coming decade, and pundits continue to speculate on the future of the housing market, the aggressive policies and growth-driven initiatives of the current administration seem promising.
China
The Chinese economy arguably gets the most media coverage out of any of the BRIC nations, and this is for good reason: since the year 2001, the Chinese GDP has increased nearly sixteen fold, with a newly rich middle class and booming population demographics. Furthermore, China recovered swiftly from the 2008 global financial crisis, as Beijing was quick to introduce a 4 trillion Yuan stimulus package to bolster local banking and loan infrastructure.
This is not to say that China does not have its own array of economic problems. Among the most criticized is the government’s consistent interference with the markets, including measures to artificially prop-up or manipulate the equity market using state funds. While policy makers aim to use this pseudo-stimulus to ease drastic market sell-offs, financial experts denounce the degree to which the government is interfering, and contend that the market should be able to support itself through lows and highs. Additionally, geo-political tensions in the South China Sea have kept Beijing on alert. Continuing to assert its rights in various land disputes, China maintains a close tab on its neighbors, including the two other surrounding BRIC nations.
Nonetheless, it remains certain that China will maintain its economic prowess in the years to come, and will likely surpass the US as the global market leader. As long as Beijing can refrain from interfering in its own markets, and allows steady monetary expansion, both purchasing power and GDP figures indicate that the only way for the Chinese economy to go, is up.
While all four countries boast their own relative markers of economic promise, only India and China have indicated a consistent track record of economic stability and growth. The international community will continue to hold its hopes high for Russia and Brazil, as both countries will be expected to take aggressive calls in stabilizing their internal affairs.
Only with meticulous self-scrutiny and self-evaluation of progress, can BRIC live up to the promise of world economic dominance that the international community expects.