In 2001, Goldman Sachs economist Jim O’Neill predicted that the BRICs would increasingly boost the world economy. Having created an unforgettable acronym, he guaranteed that many of us would pay attention to Brazil, Russia, India and China.
Now, during a CNBC interview, O’Neill says that his 15 year old report, “Building better global economic BRICs,” was correct for two of the four countries.
Where are we going? To the importance of China.
China and India
Showing that the Chinese economy contributed as much to global growth as the developed nations from 2011-2015, this graph tells it all.
Compared to the U.S., China’s per capita GDP has also soared. Meanwhile as you can see below, India’s growth makes it a distant second.
Brazil and Russia
As for Brazil, they have three strikes that have pushed them out of the economic growth big leagues. Commodity dependent, Brazil was affected by China’s slower growth. In addition, they borrowed far too much and their government has been paralyzed by ongoing scandals.
Russia, you know, is overwhelmingly oil dependent. When crude prices plunged, so too did the Russian economy.
Our Bottom Line: The Chinese Growth Engine
The world expected China to fuel the world’s economic growth. Purchasing the raw materials it needed to support a growth rate that they said was more than 14%, China buoyed the world’s commodity prices. Even with second quarter growth at 6.7% (or less if we question their numbers), still it is the only BRIC that counts.
My sources and more: If you have the time and patience, I do recommend the African Economic Outlook 2016 to see specifically the role that China plays in the world. At the other extreme, these articles from CNBC and the Washington Post Wonkblog provide quickie readable summaries. But always, for the best commentary, Timothy Taylor’s Conversable Economist is excellent. And finally, you might want to read the original O’Neill Goldman Sachs report and this WSJ article on Brazil.