News Room - Business/Economics

Posted on 18 Mar 2008

Look past ‘BRICs’ for growth: report

Investors need to look beyond the BRICs (Brazil, Russia, India and China) for future growth opportunities, according to a new report from PricewaterhouseCoopers LLP (UK). 

The World in 2050: Beyond the BRICs concludes that long-term prospects for China, India and other so-called "E7" economies (Brazil, Mexico, Russia, Indonesia and Turkey) are still upbeat. The report also looks at an additional 13 emerging economies, including Viet Nam, that have the potential to grow significantly faster than the established Organisation for Economic Co-operation and Development (OECD) countries.

John Hawksworth, head of macroeconomics at PricewaterhouseCoopers LLP, said in a press release: "The global centre of economic gravity is already shifting to China, India and other large emerging economies and our analysis suggests that this process has a lot further to run. Our latest projections suggest that China could overtake the US in around 2025 to become the world’s largest economy and will continue to grow to around 130 per cent of the size of the US by 2050. India could grow to almost 90 per cent of the size of the US by 2050. Brazil seems likely to overtake Japan by 2050 to move into fourth place, while Russia, Mexico and Indonesia all have the potential to have economies larger than those of Germany or the UK by the middle of this century."

But the fastest mover could be Viet Nam, with a potential growth rate of almost 10 per cent per annum in real dollar terms that could push the country up to around 70 per cent of the size of the UK economy by 2050.

"Viet Nam now tops the growth rankings, which in fact mirrors its leading performance in the July 2007 PwC EM20 rankings of emerging market attractiveness to manufacturing sector inward investors," says Ian Lydall, PwC Viet Nam Senior Partner.

John Hawksworth, head of macroeconomics at PricewaterhouseCoopers LLP, added, "The rapid growth of the emerging economies does not mean the demise of the established OECD economies. In fact it should prove to be a boost for them through growing income from exports and overseas investments, even as the OECD share of world GDP declines.

"But while the macroeconomic story should be ‘win-win’, at the company level there are likely to be both winners and losers from the process of adjusting to this new world economic order."

This new research uses the same methodology for projecting long-term economic growth rates as previous PricewaterhouseCoopers reports in the World in 2050 series in March 2006 (focusing on the E7 economies and the advanced economies shown in Table A) and September 2006 (focusing on the implications for global energy consumption, carbon emissions and climate change policy).

But this new report updates the projections to take account of actual performance in 2006-2007, the latest UN demographic projections to 2050 and other relevant new information.

It also extends the analysis to 13 other emerging economies with the potential to be one of the largest 30 economies in the world by 2050. Together this ‘PwC 30’ group of economies accounts for around 85 per cent of world economic output (GDP).