Fall 2013 | Emerging Markets Journal | Page 8

HOW THE

BRICS

STACK UP
By Christopher Dean
Illustrations by Liane Yue

WHAT ARE THE BRICS?

Brazil, Russia, India and China are known collectively
as BRIC. The acronym was developed by British
economist Jim ONeill in an influential 2001 paper.
These countries have in common rapidly growing

economies that appear to suggest a shift in global

power towards the developing world.

Brazil

This past year has been quite the rollercoaster

ride for Brazils economy.

Brazil has managed to eke out 1.5% growth from

Q1 to Q2, while the IMF has decreased Brazils
expected annual growth rate for 2014 from 3.2%
to 2.5%.
In 2013, the Brazilian Real has lost approximately
20% of its value over the year.
The Brazilian Central Bank has been forced to
raise benchmark interest rates to a whopping 9.5%
to combat inflation and a weakening currency.

India

India faces a triple threat of corruption, inflation,

and a growing current account deficit.

The rupee has seen record volatility in 2013, as

it weakened more than 10% YTD, pushing up
import costs for much of India.
To combat the its slide and inflation, Indias
Central Bank has been forced to raise benchmark
interest rates to 7.5% and possibly further.
Growth has slowed to 4.9% in 2013, well below the
10-year average of 7.9%.

Russia

Russia has been dealing with serious financial

challenges in the last few months.

This has been reflected by IMFs cutting of growth

expectations down to 1.5% from 3.7%.
Inflation has forced the Russian Central bank
to increase benchmark interest rates up to 5.5%,
strangling growth in Russias economy.
Its currency, the Ruble, has weakened 8% this year
as of August, as investors continue to withdraw
money from emerging markets on taper fears.

China

China began an unprecedented but promising

program of reforms for its economy in 2013.

There have been moves to shore up its banking

system, a push to slow increases in housing prices,
and efforts to eradicate corruption among party
officials.
The GDP is expected to grow at a comfortable rate
of 7.4%, according to a recent Reuters poll.
Chinese housing continues to provide strong
returns, even in the face of rising prices.