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BRIC Country Analysis
The objective of this report is to carry out economic analysis of Brazil, Russia, India, and China (BRIC) and provide the country projected economic growth, country business environment and country risk. The GDP (Gross Domestic Product) is one of the major economic tools to measure economic growth of a country. Using GDP, the report analyzes the country's economic growth. The excessive high level of investment and frothy local housing markets are likely to be the cause of the economic slow down. The forecast from Economist Intelligence Unit (2012) reveals that China is likely to record a decline in the economic growth from 9.2% in 2011 to 7.8% in 2016. As being revealed in Fig 3 and Table 3, the country will record a decline in the economic growth in the next 5 years. The country export is likely to remain weak in the next 5-year given deteriorating demand of Chinese product from European Union.
China
China is a country enjoying rapid economic growth among the BRIC countries. Over the years, the country has maintained a strong economic growth and between 2007 and 2011, the China's economy showed constant growth with economic output reaching $3.7 trillion in 2010. As being revealed Table 2, China ranks third with reference to personal disposable income where personal disposable income is projected to increase from $2,300 in 2011 to $4,190 in 2015. However, the global economic crisis that affected many advanced countries also affected China making the country's growth rate to decline from 12.8% in 2008 to 9.1% in 2009. Typically, the massive capital injection assists the country to record strong performances compared to other BRIC countries and other countries of the world. (See Fig 1 and Table 1). FDI (Foreign Direct Investments) have been the driving force for the country strong economic growth. In 2010, China recorded 10.4% economic growth making the Standard & Poor's to raise the country's long-term rating from A+ to AA- in December 2010.
"The ratings are supported by the nation's strong liquidity, moderate debt burden, strong foreign investment flows, export growth, and high levels of foreign exchange reserves. China's commitment to economic restructuring and reform has led to a booming private sector, and sustained GDP growth gives credence to the ratings." (Datamonitor, 2011 P. 17).
Table 1: BRIC GDP in U.S.$ Billion
2007
2008
2009
2010
2011
2012
2013
2014
2015
Brazil
1,366.30
1,652.80
1,621.70
2,141.90
2,473.50
2,337.30
2,543.00
2,771.20
2,942.70
Russia
1,300
1,661
1,223
1,487
1,858
1,936
2,073
2,231
2,452
India
1,196.70
1,272.60
1,345.20
1,673.10
1,860.10
1,861.50
2,144.50
2,664.50
3,156.70
China
3,504
4,547
5,105
5,950
7,212
8,096
9,182
10,451
11,948
Fig 1: BRIC Projected Economic Growth
Table 2: BRIC Projected Personal Disposable Income U.S.$
2007
2008
2009
2010
2011
2012
2013
2014
2015
Brazil
4,560.00
5,370.00
5,400.00
6,880.00
7,950.00
7,650.00
8,260.00
8,960.00
9,480.00
China
1,153.10
1,464.30
1,640.00
1,890.00
2,300.00
2,700.00
3,130.00
3,630.00
4,190.00
India
1,070.00
1,170.00
1,230.00
1,400.00
1,640.00
1,900.00
Russia
4,955.10
5,858.70
5,160.00
Table 3: China Economic Growth
2011a
2012b
2013 b
2014 b
2015b
2016b
GDP
9.2c
8.2
8.5
8.0
8.0
7.8
Private consumption
9.0
9.2
10.1
9.9
9.5
9.3
Gross fixed investment
10.1
8.5
9.5
9.1
8.6
8.2
% change in Consumer Price Index
5.4
2.6
1.7
2.6
3.0
3.2
Source: Economist Intelligence Unit Limited. (2012).
Fig 3: China Economic Growth Forecast
One of the major challenges facing the country is the rising of unemployment and inflation. Between 2007 and 2008, more than 70 million people were jobless, and the inflation rose to 5.5% in 2011 leading to the rise in the costs of production. Moreover, the regulatory framework in China is weak compared to other European countries. China lacks effective judicial resources and low salaries being earned by judges are pushing judges towards corruption. Additionally, China's accounting and reporting standard is far behind the European transparent accurate accounting and reporting standards. (Datamonitor, 2011).
Russia
Russia is enjoying moderate economic growth since 2007. As being revealed in Table 1, the country GDP increased from $1,300 billion in 2007 to $1,856 billion in 2011. The data from Economist Intelligence Unit Limited (2012) reveals that Russia is likely to record positive increase in the economic growth between 2012 and 2016. ( See Table 4). More importantly, the country personal disposable income is higher similar to Brazil personal disposable income. The projected growth rate for personal disposable income will increase from $6,970 in 2011 to $9,200 in 2015. Moreover, the gross fixed investment growth rate is likely to increase from 6% in 2011 to 8.8% 2016. However, the country will record the decline in private consumption between 2012 and 2016. (See Table 4).
Table 4: Russia Economic growth
2011
2012
2013
2014
2015
2016
GDP
4.3
3.5
3.8
4.1
4.2
4.1
Private consumption
6.4
6.1
4.2
4.5
4.2
4.2
Gross fixed investment Growth Rate
6.0
6.0
7.0
8.0
8.5
8.8
Fig 4: Russia Economic Growth
Despite the growth rate enjoyed by the country, the country GDP growth rate is not above 20% which is far…
References
Datamonitor. (2011). Country Analysis Report: China.
Economist Intelligence Unit Limited .(2012). China Country Report. The Economist Intelligence Unit Limited. United Kingdom.
Economist Intelligence Unit Limited .(2012). Russia Country Report. The Economist Intelligence Unit Limited. United Kingdom.
PRS Group (2011).Brazil Country Conditions Climate for Investment & Trade. PRS Group Inc.
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