Today, ten years since Goldman Sachs Asset Management's chief economist Jim O’Neill invented the acronym ‘BRIC’, he says the world’s four main emerging economies have easily beaten most of his predictions.
Today, ten years since Goldman Sachs Asset Management’s chief economist Jim O’Neill invented the acronym ‘BRIC’, he says the world’s four main emerging economies have easily beaten most of his predictions.
The eurozone, by contrast, has failed to make true some of his 2001 forecasts, or hopes, for the currency bloc.
O’Neill (pictured) added the growth story for BRICs is far from over.
“The BRIC economies combined have grown to around $13trn and are poised to overtake the size of each of the US and the EU in coming years.
“Over the decade, they have created the equivalent of close to seven new United Kingdoms or at least of the 2001 size. China alone has added slightly more to world GDP than the US, around $5.5trn probably by the end of this year.
“In the decade ahead, the BRIC countries will probably create at least another one of their current self, that is, grow by around $12-$13trn in nominal US dollar terms, assuming that they collectively grow at somewhat softer rates. If they grow by similar degrees as the last decade, their contribution in nominal US dollars could be closer to $20trn.”
China’s growth might slow, he said, but India’s could accelerate, “especially if India persists with what looks like some sudden passion for policy reform [including] allowing majority foreign ownership of their domestic retail businesses”.
“More of these kinds of decisions and India will possibly finally succeed in achieving China-style GDP growth rates.”
Back in 2001, O’Neill’s first argument about ‘BRICs’ was that if the economies of Brazil, Russia, India and China continued to grow as quickly in relative and absolute terms, then their combined share of global GDP could rise from the 8%, back then, to 14% by 2010.
In fact, their share now is 18% to 19%.
Their continued expansion is part of the answer about why some analysts expect non-OECD nations to contribute three times more to global GDP growth than OECD nations do in 2012/2013.
O’Neill also forecast China’s economy could be almost as big as Germany’s.
In fact it has “sailed past” Europe’s largest, to become the world’s second largest behind the US. “It is not far off twice the size of Germany,” O’Neill said yesterday.
Brazil might get close to the size of Italy, he said in 2001. In fact, it passed Italy to become the seventh largest economy last year.
If O’Neill’s forecasts for the world’s major growth markets have come true, his forecasts for the world’s largest trading bloc – Europe – have not, yet.
He said back in 2001, that “since France, Germany and Italy were all now part of a monetary union with no independent monetary policy, why didn’t they agree to represent themselves collectively in the G-meetings and indeed at the IMF?
“It would demonstrate to many that their commitment to a permanent monetary union was rock solid.”