Whatever happened to the BRICs?

Trajectory Trends Breakfast

28th April 2016

Introduction

2

Whatever happened to the BRICs?

WHAT ARE THE BRICS?

The BRICs: Origins

4

BRIC Countries in 2001

Very large in terms of size & population

Rapidly expanding domestic markets

Untapped labour reservoir

Most important countries in their respective regions

Had displayed impressive growth figures before 2001

Were undergoing military modernisation efforts to preserve strategic interests

Source: CNBC Finance

Shifting balance of power

5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Emerging/developing

Advanced

% of Global GDP held by nations

IMF WEO April 2016

The financial crisis

6

G20 – Twice as democratic as G8?

Current state of play

7

CRACKS IN THE BRICS

Significant disparities between

GDP Per Capita in each BRIC

10,738

12,735

11,726

7,590

1,581

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

World Russia Brazil China India

Very sharp divergence in GDP

Per Capita – Current US $ Dollars

(2014 Data)

9

-6%

-4%

-2%

0%

2%

4%

6%

8%

2013 2014 2015 2016 2017

IMF WEO GDP Growth 2014-2015 and

Projections to 2017

Brazil Russia China India

IMF WEO 2015

Demographic divergence

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Total population growth by country, annually for 2013-2030

China Brazil India Russia Poland Ukraine

10Source: UN World Population Prospects, 2015

Age Dependency Ratios in BRIC countries

11

0 5.0 10.0 15.0 20.0 25.0 30.0

Brazil

China

India

Russia

Poland

Ukraine

Over 65s as a % of working-age population

World Bank Data, 2014

Technologically diverse

% using the internet (all people)

Source: ITU 2013

Distinct Domestic Realities

INDIA RUSSIA BRAZIL CHINA

All have been exposed to endemic corruption, regional income

inequalities, dependence on commodities exports, poor institutional

and regulatory frameworks

13

CSIS Report 2015

Trust in Political and Media

Institutions plunging in some BRICs

20% 21%18%

29%33%31% 31%

26%

43%41%

49% 51%

24%

69%

61%

26% 28%

7%

43%

29%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Multinational

business leaders

National business

leaders

Politicians Newspapers TV

% saying they trust each group/source

Russia China India Brazil

14Source: Trajectory Global Foresight 2014-2015

No convergence between national

priorities in recent decades

15

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Fighting rising prices

Brazil China India Russia

0%

5%

10%

15%

20%

25%

Protecting freedom of speechBrazil China India Russia

Source: World Values Survey/Trajectory Global Foresight 1989-2015

Goldman Sachs closes BRIC fund

16

-30

-25

-20

-15

-10

-5

0

5

10

15

20

2010 2011 2012 2013 2014

Goldman Sachs’ BRICS fund, assets under

management

Source: Goldman Sachs, September 2015

WHAT NEXT?

17

Fragility of the BRICS as a political project

18

707

269

263

239

199

0 100 200 300 400 500 600 700 800

China

India

Brazil

South Africa

Russia

Commercial Interests Harmed by a Fellow BRICs

Member (no. of occasions) since 2010

"Conflicting interests and the

indisputable political, social, and

cultural differences among the

group's members have kept the

BRICS from translating their

economic force into collective

political power on the global stage”

- Center for Strategic and

International Studies October Report

(2015)

Source: Global Trade Alert

The continued importance of

advanced markets

19

Rank GDP per Capita

(2016)

Rank Ease of Doing

Business (2015)

Rank Innovation Index

(2015)

1 Luxembourg 1 Singapore 1 Switzerland

2 Switzerland 2 New Zealand 2 UK

3 Norway 3 Denmark 3 Sweden

4 Qatar 4 South Korea 4 Netherlands

5 Macao SAR 5 Hong Kong 5 US

6 US 6 UK 6 Finland

7 Iceland 7 US 7 Singapore

8 Ireland 8 Sweden 8 Ireland

9 Denmark 9 Norway 9 Luxembourg

10 Singapore 10 Finland 10 Denmark

71 China 51 Russia 29 China

73 Russia 84 China 48 Russia

76 Brazil 116 Brazil 70 Brazil

142 India 130 India 81 India

Source: IMF, World Bank, McKinsey, 2016

Digital globalisation

20Source: McKinsey Global Institute, 2016

Away from acronyms

21

Algeria

ArgentinaArmenia

Australia

Azerbaijan

Bangladesh

Belarus

Brazil

Bulgaria

Burkina Faso

Canada

Chile

China

Colombia

Cyprus

Ecuador

Egypt

Estonia

Ethiopia

Finland

France

Georgia

Germany

Ghana

Guatemala

India

Indonesia

IranIraq

Italy

Japan

Jordan

Kazakhstan

Kyrgyzstan

Lebanon

Libya

Malaysia

Mali

MexicoMoldova

Morocco Netherlands

New Zealand

Nigeria

Norway

PakistanPeru

Philippines

Poland

Qatar

Romania

Russia

Rwanda

Serbia

Singapore

Slovenia

South Africa

South Korea

Spain

Sweden

Switzerland

Tanzania

ThailandTrinidad and Tobago

Tunisia

TurkeyUAE

Uganda

UKUkraine

Uruguay

USA

Uzbekistan

Viet Nam

Yemen

Zimbabwe

A richer understandingValues, life events and national wealth

Bubble size = GDP per capita

Ha

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Values/outlook (16-35s)More traditional More modern

Developed & ModernForward thinkersCaught betweensTraditionalsDeveloping and Traditional

UK Implications

23

A date for your diaries

24

The Future of the UK: domestic fragmentation

Wednesday 25th May

Thank you