BRIC, N-11 Nations Emerging Stronger than G7 Economies

A new research paper by Goldman Sachs reveals that the BRIC and N-11 economies, combined, are emerging from the global financial crisis better than the major economies. The report also says that it is now possible that China could become as big as the US by 2027.


In Goldman's terminology, the BRIC countries -- Brazil, Russia, India and China -- are fast-growing and populous economies whose combined GDP could surpass those of the current rich nations by 2050. The N-11 (for Next Eleven) economies -- Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam -- are medium sized markets that could follow the BRICs on the same path.


Of the two groups, China is at the top of the list of nations which have surpassed Goldman Sachs' expectations. "Within the N-11, Indonesia and the Philippines have positively surprised," says the investment bank. Brazil, India and Egypt have also performed well.


"This group of ‘winners’ have experienced a relatively mild slowdown, and have shown an impressive rebound in growth and activity this year," notes Goldman Sachs in the report.


According to the report, between 2000 and 2008, the BRICs contributed almost 30% to global growth in US Dollar terms, compared with around 16% in the previous decade. At the same time, the G7’s contribution has fallen from over 70% in the 1990s to just 40% on average during the current decade.


Meanwhile, the N-11 contribution has risen by a modest 1% in the last two years, to 11%. The contribution from all emerging markets as a whole was over 80% (vs. the 2000-2006 average of 45%). The G7 has only contributed 20% in the past two years.


On an individual country basis, all of the BRICs and seven of the N-11 (Bangladesh, Egypt, Indonesia, Iran, Nigeria, Philippines and Vietnam) contributed more to world growth in 2007-2008 than from 2000 to 2006.


Overall, Goldman Sach's Growth Environment Score (GES) for the BRICs and N-11 economies has increased slightly. The report explains that GES is designed to measure the strength of a country's sustainable growth.


Among the BRICs and N-11, Brazil’s GES score rose the most, along with Indonesia and Turkey. India, Russia, the Philippines, Pakistan and Vietnam have experienced small declines.


The overall GES improvement in the N-11 was actually higher than in the BRICs. Eight countries posted gains, with Indonesia and Turkey advancing most, notes the report.


"A country must maintain and improve growth conditions in order to achieve its potential," says the Goldman Sachs research paper. "Looking at our growth forecasts for 2010 and 2011, we can also see whether growth conditions are likely to play a role in the recovery. Presumably, better growth conditions (relative to others in the group, and over time) are likely to ensure a faster rebound."


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