Co-founder & Director, BRIC+ Program
February 24, 2009
The BRIC economies have strong financial reserves and will continue to invest in infrastructure and domestic consumption
The four BRIC nations hold 41% of total global foreign exchange reserves: $1,528 billion in China; $464 billion in Russia; $266 billion in India; and, $179 billion in Brazil. These reserves have allowed each government to respond to the global financial crisis by announcing fiscal stimulus packages, bringing forward infrastructure spending on housing, education, public health, transportation and energy projects, and handing out social benefits to encourage consumers to spend more. The combined BRIC investment in infrastructure of over $22 trillion by 2020 was planned well before the 2008 global economic downturn and, far from looking to cancel or defer these commitments to building much-needed roads, rail, ports and power generation, the BRIC countries have actually brought forward spending plans to stimulate economic growth.
The BRICs are hungry, and determined to grow
It is easy to forget that only 30 years ago all four BRIC countries were virtually bankrupt. Their vast, hungry and diverse populations were experiencing the pain of poverty and hardship, inept and/or weak governments, stagnating economies and the humility of being subject to regular lectures from the West about how to run their countries.
How times have changed. To quote Brazilian President Luiz Inacio Lula da Silva during the G20 talks at the end of 2008: "Important banks - very important banks - that spent their lives giving advice about Brazil and what we should or shouldn't do, are now broke. Brazil is more prepared than any country in the world to deal with the new global economic landscape, and has been preparing for some time to become a solid economy."
Each of the BRIC countries needs to grow – and will continue to – in order to satisfy the increasing ambition of its huge population to improve standards of living, increase personal wealth and live a better life. This century will see the four BRIC countries become four of the six largest economies in the world.
Don’t give up on them yet!
With global emerging markets now widely recognized as a key element of quality investment portfolios, it’s imperative that those who design investor portfolios become as familiar with the global emerging markets as they are the developed markets. The BRIC+ Program is a continuing professional development service providing exclusive insights into global emerging markets. It delivers independent educational activities designed for researchers and investment committee members from dealer groups, platforms, super funds and research houses, and financial planners with a role in investment portfolio design, to enhance their understanding, knowledge and experience of global emerging markets. www.BRICplus.net
A version of this article was originally published in the Australian edition of Money Management on January 29, 2009.
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