To understand the dynamics of the new globalized economy, certain countries are often grouped together based on common traits, like growth rate, population and political circumstances. We all know about the G7 (formerly the G8), but what about the BRICs and N-11? What do they mean for your business?
Coined by former Goldman Sachs and UK government economist Jim O'Neill in 2001, the 'BRIC' countries - Brazil, Russia, India and China – were identified by O’Neill as having the potential to overthrow the economic hegemony of the G7 nations to become the top-four powerhouse economies of the century. From now onward (or so O'Neill would have it) these countries are going to be a big part of your overseas trade: Brazil is 8th, Russia is 12th, India is 6th and China is 2nd in global GDP rankings. In 2009 the leaders of the BRIC countries held their first summit, making it a formal institution and more than just an economist's shorthand.
Following economic liberalization in 1978, China is now set to overtake the US as the world’s largest economy by 2032, while India is racing up the GDP league table with a growth rate that beats even China. Brazil has returned to growth following a recession in 2014. South Africa has been touted as a fellow BRIC country, making it 'BRICS' – although its population is much smaller than other BRIC nations.
In 2015, the combined GDP of the BRICS nations (including South Africa) was about a third that of the G7 nations (the US, the UK, Canada, Germany, Italy, Japan, and France). By 2050, the figures will tell a different story: BRICS will produce double the GDP of the G7. An incredible, and almost inevitable, transformation.
But the BRICs thesis has come under fire in recent years. Russia and Brazil went into recession, while China's growth has stalled unexpectedly. Goldman Sachs even closed its BRICs investment fund at the end of 2010. But in the long term, the BRICs are looking good.
Could they be your next export markets? Here’s our at-a-glance guide to the BRIC economies.
Growth rate: 1.0%
POSITIVES: The second biggest economy in the Americas after the US. A growing middle class with high demand for overseas imports. Could be the 4th largest economy by 2050.
NEGATIVES: The lowest growth and the lowest importer of all the BRIC nations. Imported just US$150bn in 2017. Still recovering from a recent recession.
How easy is it to do business there? Brazil is placed 109th out of 190 countries on the World Bank’s Ease of Doing Business ranking. And it’s rising up the rankings.
Major imports: Fuels and oil, electrical machinery, computers, vehicles, organic chemicals and fertilizers, pharmaceuticals, and plastics.
Has it delivered on the BRICs promises? Brazil has fallen behind, but it's come to life once more.
Growth rate: 1.5%
POSITIVES: Still growing and remains a strong import market, despite international sanctions. Russia is the only BRIC country with a per capita income above the global average.
NEGATIVES: Real wages have been falling since 2013. Could be overtaken by challengers like Indonesia and Thailand. South Korea’s economy is about the same size (but Russia is more populous).
How easy is it to do business there? Russia is placed 31st out of 190 countries on the World Bank’s Ease of Doing Business ranking, making it the top-scoring BRIC country.
Major imports: Machinery, computers, vehicles, pharmaceuticals, plastics, aircraft and spacecraft components, iron, steel, fruits, and nuts.
Has it delivered on the BRICs promises? Russia still wields international trade power. Its best days may be ahead of it.
Growth rate: 8.2%
POSITIVES: Leads the BRICs for growth. The world’s sixth largest economy with a huge population and no signs of slowing down. Fast growing services sector suggests more disposable income.
NEGATIVES: Lowest BRIC per capita GDP (but the market in India is huge).
How easy is it to do business there? India is placed 77th out of 190 countries on the World Bank’s Ease of Doing Business ranking.
Major imports: Fuels, gems, precious metals, electrical items and computers, chemicals, plastics, animal/vegetable fats, oils, waxes, iron, and steel.
Has it delivered on the BRICs promises? India has been playing in China's shadow, but it's about to hit the limelight as a global force to be reckoned with.
Our score: B+
Growth rate: 6.9%
POSITIVES: Still growing quickly. Likely to overtake the US as the world’s largest economy in the early 2030s.
NEGATIVES: China’s growth is slowing down, with a possible knock-on effect to nearby economies (Indonesia, Thailand, Hong Kong).
How easy is it to do business there? China is placed 46th out of 190 countries on the World Bank’s Ease of Doing Business ranking. It is rising up the rankings as China continues to open its doors to overseas investment.
Major imports: Electrical equipment, fuels and oil, computers, ores, optical, and medical equipment, vehicles, plastics, chemicals, and copper.
Has it delivered on the BRICs promises? Has China delivered on its BRICs potential? Most certainly, and there's more still to come.
Our score: A-
Enthusiasm for the BRICs concept has waned, so what will replace it? Also coined by Jim O’Neill, the ‘N-11’ group dates back to 2005. After the BRIC countries comes a group of eleven economies – Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea and Vietnam.
These nations are a broad mix. Their only real connection? A colossal potential for economic progress. This selection could be widened to include countries like Ethiopia and Congo.
Since 2005 the standout performers have been South Korea, Turkey, Nigeria, the Philippines and Vietnam (part of the Tiger Cub economies). Writing in April 2018, Jim O’Neill noted that the N-11 group has grown 4.5% this decade, and 4% in the previous decade.
‘Mexico, Indonesia, Nigeria, and Turkey’. You’ll notice that all four of these appeared in the Next Eleven category – think of MINT as an update to N-11. Goldman Sachs predicts that all four MINT nations could be inside the top 20 economies by 2050, with Indonesia and Mexico breaking into the top 10.
BRIC, N-11, MINT – they’re just acronyms used by economists. But they can help us all understand the growth and potential of markets and countries. And that helps any business form a growth plan – where you’re going to focus, where you should deploy marketing and even where you should open new offices.
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