The Global Economy in Turbulent Times

CHAPTER 132 BRICS Can’t Run as a Herd¹

BRICS—Brazil, Russia, India, China, and South Africa—held its fifth Durban Summit on March 27, 2013, under the overarching theme: BRICS and Africa: Partnership for Development, Integration, and Industrialization. They envisaged an inclusive approach of shared solidarity and cooperation, committed to “exploring new models and approaches towards more equitable development and inclusive global growth by emphasizing complementarities.”² Back in 2001 during the dot-com bust, Goldman Sachs’s Jim O’Neill created the acronym BRIC (without South Africa), proclaiming these emerging nations would drive markets in the next decade. He was right. In 2002, BRIC accounted for only 3 percent of World Federation of Exchanges market value. By 2011, it was one-fifth.

Historically, BRIC economic cycle moved in tandem with the advanced world. The gap in growth remained stable at 8.6 percentage points in BRIC’s favor during precrisis 2007–2008. After that, the gap started to narrow, falling to 3.5 percentage points in 2012 in the face of slackening world growth. That’s still significant. BRIC held its first summit four years ago and invited South Africa (smallest among them) to join the pack in 2011; and so, it became BRICS—accounting for 43 percent of world population and 27 percent of world gross domestic product (GDP) in 2012, with combined foreign reserves of US$4.4 trillion.

Trade among them surged past US$300 billion last year from only US$30 billion in ...