What Is BRIC?
BRIC is an acronym for Brazil, Russia, India, and China. The BRIC economies, or the “Big Four,” were collectively seen as emerging economic powerhouses. Economist Jim O’Neill, chair of Goldman Sachs Asset Management, introduced the acronym in his 2001 paper, “Building Better Global Economic BRICs.”
After the 2008-2009 financial crisis the economic and political fortunes of the Big Four began to diverge, and only India and China now appear to have met expectations.
- Brazil has fallen into a low productivity trap in recent years.
- Russia’s reputation for corruption has made investors wary.
- India continues to grow and posted 8.7% economic growth in 2021.
- China has achieved a growing share of global GDP.
O’Neill’s paper attracted a great deal of attention from economists and investors. The paper focused on the growing importance of these emerging market economies. Brazil, Russia, India, and China, he noted, were by some measures healthier than the G7 nations and it could be expected that their economies would grow faster than those of the G7. He limited his predictions to the years 2001 and 2002 but concluded that “a healthier environment for the BRICS seems likely to remain” over the decade.
O’Neill grouped these nations because they had the potential to form an influential economic bloc, not because they had any existing political alliance or formal trading association. However, the nations began a series of annual international relations summits in 2009.
In 2010, South Africa was becoming a fast-growing financial power for all of Africa. It was officially admitted as a BRIC nation following an invitation from China and the other BRIC nations. The admission of another economic force transformed the original acronym into BRICS, for Brazil, Russia, India, China, and South Africa.
Evolution of the BRIC Nations
Brazil’s economy was showing great potential across agricultural, industry, and services sectors when it was defined as a BRIC. But the South American giant was still recovering from a recession when the COVID-19 pandemic hit in 2020, creating a public health crisis and causing what was expected to be its deepest slump on record.
Brazil has suffered two decades of low productivity growth due to a cumbersome business climate, among other factors.
Today, Russia is the source of about 20% of the world’s supplies of oil and natural gas. It has vast wealth in other natural resources as well, including minerals and timber.
The Russian Federation’s economy fell off a cliff with the economic crisis in 2008, with gross domestic product falling to -7.8%, according to the World Bank.
It recovered, but geopolitical concerns and a reputation for corruption have combined to relegate Russia to the sidelines of global investment. In 2022, as the political and economic realities of a protracted conflict in Ukraine impact the Russian economy and its petroleum exports, many of these concerns have become magnified further.
India’s middle class is larger than that of the United States. For that matter, Bollywood is bigger than Hollywood.
India blew through the Great Recession without a pause and now appears to be making a strong comeback from the COVID-19 crisis and its overall economy grew by 8.7% in 2021.
China is no longer an emerging economy. It has emerged. It is expected to account for more than 19% of the global gross domestic product (GDP) in 2021 and is projected to top 20% by 2025.
South Africa is going through a rough spot. Its real GDP growth was just 0.2% in 2019. Then the COVID-19 pandemic hit, driving GDP down by 8.2% for 2020. After a strong rebound in 2021, GDP is projected to grow by 1.8% and 1.3% in 2022 and 2023 respectively.