As Brics Economies Grow Up, 10 Upstarts Emerge: Report

As Brics Economies Grow Up, 10 Upstarts Emerge: Report

By Agence France-Presse on 01:20 pm Mar 26, 2014

  1.  Indonesia, Bangladesh and Ethiopia are among 10 countries set to take over as emerging economies from the powerful Brics nations as they struggle with growing pains, a French credit body said on Tuesday.

“After 10 years of frenetic growth” the big five emerging economies of Brazil, Russia, India, China and South Africa — the Brics — “are slowing down sharply,” the French trade credit and insurance group Coface said.

In a report entitled “Coface identifies 10 emerging countries hot on the heels of the BRICS,” the organization said that average economic growth by the Brics this year would be 3.2 percentage points less than the average in the last 10 years.

But “at the same time, other emerging countries are accelerating their development,” it said.

The growth of emerging economies and the effect this has on world trade flows is closely analyzed by economists because of the huge impact on every aspect of the global economy and power balances.

Coface broke the 10 new emerging economies it has identified into two groups.

The first comprises Peru, the Philippines, Indonesia, Colombia and Sri Lanka, which it named the PPICS.

They had “strong potential confirmed by a sound business environment,” Coface said.

The second group comprises Kenya, Tanzania, Zambia, Bangladesh and Ethiopia.

But these countries are marked by “very difficult or extremely difficult business environments which could hamper their growth prospects,” Coface said.

However, the head of country risk at Coface, Julien Marcilly, said that in 2001 “the quality of governance in Brazil, China, India and Russia was comparable to that of Kenya, Tanzania, Zambia, Bangladesh and Ethiopia today.”

But the 10 “new emerging countries” currently accounted for only 11.0 percent of the world population whereas the Brics had accounted for 43 percent of the population in 2001.

The total gross domestic product of the new 10 was only 70 percent of the output of the Brics in 2001, and they had a current account deficit of about 6.0 percent of GDP whereas the Brics had run a surplus on average.

Estimating growth and risk

On a positive note, the new 10 had inflation which was about 2.8 percentage points lower than BRIC inflation in 2001, and their public debt was about 40 percent of output compared with 54 percent for the Brics at that time.

Coface said that growth in the Brics was slowing down, despite favorable trends for consumption, because of an adjustment in supply and “a marked slow-down in investment.”

Local businesses could no longer satisfy strong demand, it said.

Marcilly said that the Brics were moving into a new phase since their exports were becoming less competitive, and because they were not yet competitive in offering products with very high added value.

This was why Coface had set out to identify the next wave of driving emerging markets, looking for potential annual growth exceeding 4.0 percent, a diversified economy without undue dependence on the sale of raw materials, and some capacity to absorb economic shocks.

These conditions had to be matched by a financial system capable of supporting investment, but without raising risks of overheating.

The chief economist at Coface, Yves Zlotowski, said that the organization had tried to combine measures of growth potential and risk potential.

This method had excluded Vietnam from the list of new emergers because although it had strong economic potential, its financial system was out of control, he said.

Coface said that its list of so-called neo-emerging markets could not be compared with the Brics in terms of size and population.

The use of the word PPICS as an acronym comes in a line of attempts by economists to group various types of new emerging economies.

Among these are MINT for Mexico, Indonesia, Nigeria and Turkey, or CIVETS for Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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