Its Future Prospects

Presented by: -

• Acronym for an association of five emerging economies:

Brazil, Russia, India, China, and South Africa.

• Term coined by , Jim O’Neill , a global economist in

Goldman Sachs in 2001

• First Summit : Yekaterinburg, Russia on June 16, 2009.

• Entry of South Africa in 2010.

Key Statistics

3 Billion people

Combined GDP of

US$18.486 trillions

Combined reserves of US$ 4 trillion

Represents 18% of world economy

Accounts for just over $13.5-trillion of the world's total output

Need/ Importance of BRICS

• Promote the technological information exchange

• Improve the professional development and education of countries.

• Making these countries getting closer to others to obtain the

comparative advantages of these countries.

• To achieve regional development

• To remove trade barriers

• Economic development

• Optimum use of resources

• Building relationship

razil

10th fastest growing economies in the last centuries

Extremely rich in resources such as coffee, sugarcane, crude oil and iron etc.

Focus on equitable development has resulted in significant poverty reduction.

Textiles, chemicals , iron ore , steel and motor vehicles industries.

31% of people in middle income group.

Brazil today is the most popular of the BRICs so far as foreign direct investment is concerned

USSIA

Russia has capability in high-technology sectors

Accounts for around 20% of the world’s oil and gas reserves

Fall in the number of people living below the poverty line

Consumer market of over 140 million people

68% of people comes under middle income group

Highly educated workforce

Third largest exporter of steel and aluminium

NDIA

1.2 billion people

2nd largest labour force

Holds second place followed by China in BRICS

Democratic country

Broad knowledge economy.

HINA

18Th fastest growing economy

Third largest country in land size

Biggest of all BRIC nations GDP wise

13% of people comes under middle income group

Holds more than $3 trillion forex reserves.

Largest exporter/ importer for 32 and 34 countries respectively.

Cheap labour work force

outh Africa

The South African economy is now the 23rd largest in the world

Inflation is below 6.6% and falling.

25% of goods produced in South Africa are for export

Richest in terms of its mineral reserves.

TO

Trade between Brazil, Russia & Rest of BRICS

Trade between India, China & Rest of BRICS

Trade between South Africa & Rest of BRICS

• Source based on UN COMTRADE and http://wits.worldbank.org/wits/

BRICS - Developments

Russia

• Treasury bonds – known as OFZs

• Large sporting events.

China

• Recent reforms by the China securities and regulatory Commission (CSRC) has sought to bolster investor confidence.

• Financial help to SME’s

• 600 million citizen have been lifted out of poverty in China.

• China’s state owned enterprise produced over 50% of its goods and services and employed over half of the nation labour force.

South Africa

• Invested Rs.300bn in expanding Its Railway, Ports and fuel pipelines.

• 10% of the world’s oil reserves, 40 % of gold ore and 95% of platinum

Brazil

• Development of new oil fields and refineries in order to increase production capacity in Brazil.

• Improved efficiency of agricultural output

India

• Access to affordable drugs to global countries.

BRICS

• Signing Bilateral accords on air defense, gas and education among nation members

• 21% of world’s GDP,

• 20% Global Trade,

• 11% accumulated investments.

 Brazil  Russia  India  China  South Africa

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00% Brazil; 93.50%

 Russia; 99.60%

 India; 74.04%

 China; 95.10%

 South Africa; 93.00%

Literacy rate (2013)

 Brazil  Russia  India  China  South Africa

00.10.20.30.40.50.60.70.80.9

0.744 0.778

0.586

0.7190.658

HDI(2013)

Brazil Russia India China South Africa

010203040506070

Trade(as % GDP)2010 Linear (2010) 20112012 2013

Perc

en

t (%

)

Brazil Russia India China South Africa

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Exports

2010 2011 2012 2013

$ (

in m

illi

on

)

Brazil Russia India China South Africa

0

400,000

800,000

1,200,000

1,600,000

2,000,000

Imports

2010 2011 2012 2013

$ (

in m

illi

on

)

Brazil

India

South Africa

0 5000 10000 15000 20000 25000 3000013773

20541

4549

9053

11426

15034

24120

5410

11904

12504

GDP per capita

2013 2010

$

Brazil Russia India China South Africa

2.52.8

1.6

4.6

1.0

3.6 3.8

0.0

3.8

2.3

Foreign direct investment, net inflows (% of GDP)

2010 2013

Perc

en

t (%

)

Comparison of developed (G7)

countries with the emerging (BRICS)

nations.

GDP 2014 in billion dollars

 Can

ada

 Fra

nce

 Ger

man

y

 Ital

y

 Japa

n

 Uni

ted

Kingd

om

 Uni

ted

State

s

 Bra

zil

 Rus

sia

 Indi

a

 Chi

na

 Sou

th A

fric

a0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1,8252,737

3,6362,072

4,902

2,536

16,800

2,243 2,118 1,871

9,181

351

GDP rate of change YOY

Population

 Can

ada

 Fra

nce

 Ger

man

y It

aly

 Japa

n

 Uni

ted

Kingd

om

 Uni

ted

Stat

es

 Eur

opea

n Uni

on

 Bra

zil

 Rus

sia

 Indi

a

 Chi

na

 Sou

th A

frica

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

Foreign Direct Investment flows

FDI flows 2011-2014 (no of times)

Foreign exchange reserves

0

1,000

2,000

3,000

1296

239 172 173 95 148 66

3213

499 352 299 49$

in

bil

lion

s

01,5003,0004,500

1,283208 157 154 143 144 75

4,009

478 376 319 48

2011

2014

Growth rate of new business formation

• Gap between the G7 nations and BRICS economies narrowed in 2013, according to research.

• BRICS had a rate of over seven times greater than the G7 countries from 2007-2011, posting a 5.8 percent Combined Annual Growth Rate (CAGR) versus a 0.8 percent increase by the G7.

• In 2012 the BRICS rate was 4.9 percent, generating 1.2 million new businesses & G7’s was 1.9 percent, adding 531,000 companies.

• China grew at 9.1 %. 

• Brazil grew by 3.4 %.

• France exhibited the fastest rate of 16.7 %.

• Italy declined by 0.3 % and Canada dropped by 13.6 %.

• The report indicates that well targeted government interventions can boost the survival rates of startup companies that require time and capital to translate their competitive assets into sustainable growth.

Future ProspectsSustainable solution for inclusive growth

• Broadening multi-dimensional co-operation

• Mutual Trade and Investment

New Development Bank (BRICS Bank)

• Lending for Infrastructure projects

• Aid to other small economies

Contingent Reserve Arrangement

Export Credit & Guarantee Agencies

Significant Role in International Affairs

Trade in local currency

Working Population across the World

Rising Middle Class

Infrastructure Investments

Growth and Demand

GDP & Per capita Income

BRICS – ChallengesDevelopment of BRICS bank

Reducing the rural/urban income gap

Maintaining macroeconomic stability

Inadequate Financial reforms

Managing Supply Chain

Dependency on oil

Corruption

Industrial output is weak

Inefficient Judicial System

Illiteracy

Lack of Infrastructure

High Inflation

Economic disparity

48% population below poverty line

Lack of skill sets, particularly in IT

Conclusion It is possible that China could become as big as the US by 2027

India and Russia will individually be larger than Spain, Canada or Italy by 2020

 By 2025 BRICS will be over half the size of the G7

Long-term projections BRICs could account for almost 50% of global equity markets by 2050

 Of the current G7, only the US and Japan may be among the seven largest economies in US

dollar terms in 2050

By 2050, the largest economies in the world (by GDP) may no longer be the richest (by income

per capita)

Thank You