Earlier, Former analyst, co-founder of George Soros's Quantum Funds, Jim Roger, in his new book, Streets Smarts (pic) stated that Jim O’Neill only get 3 countries's wrong, India, Rusia and Brazil.The acronym created in 2001 groups Brazil, Russia, India and China, and has become a reference for a perceived shift in economic power toward developing economies.
“If I were to change it, I would just leave the ‘C,’” Mr. O’Neill said in an interview. “But then, I don’t think it would be much of an acronym.”
Jim Roger, who travel personally to all 4 countries after his retirement from Quantum Funds, feel that only China have the potential.
Economic growth in other BRIC countries has been disappointing, and the economic outlook for developing economies in general has changed in the last few years amid the end of a commodities boom and a slowdown in Chinese growth–which nevertheless remains high compared with that of its counterparts.
Meanwhile, signs of a recovery in the U.S and expectations the Federal Reserve will soon reduce its bond-buying program have helped strengthen the U.S. dollar, sucking money out of emerging markets and putting even more pressure on their less developed economies.
It has become “fashionable” to say the developed world is recovering while emerging markets are all slowing down, Mr. O’Neill said. “But what people don’t understand is the size of China,” he added.
The economist said that if China’s economy grows 7.5% this year, as he expects, that would create an additional $1 trillion in wealth, in U.S. dollar terms. “For the U.S. to contribute at the same level, it would have to grow around 3.75%,” Mr. O’Neill said.
Economists currently expect the U.S. economy to expand 1.5% in 2013, down from 2% projected in May, according to a recent survey by the Federal Reserve Bank of Philadelphia.
From 2011 to 2020, Mr. O’Neill said he has assumed average growth for the BRIC countries of 6.6% a year, less than the 8.5% average in the previous decade. Most of it up to now has come from China.
India has been the biggest disappointment among the BRIC countries.
China’s one-child policy boost growth: This restrictive policy and China’s adoption of Deng’s pro-market reforms began in the late 1970s. Since then, China’s per capital income rose more than 8-fold. In 2028, India will overtake China (with 1.39 billion) as the world’s most populous nation with 1.46 billion. However, Jim Roger feel India unable to solved it poverty and infrastruture problem.
Vulnerable economies
That might be the reason India drop from 2nd to 4th on 2013 Global Manufacturing Competitiveness Index . It is interesting to see whether Deloitte prediction will be correct that India would rise to 2nd position on 2013 Global Manufacturing Competitiveness Index in 5 years.
The broad-based sell-off in assets of Asian emerging markets (from equities to bonds) has led to significant decline in the values of the region’s currencies. Particularly hit hard have been India and Indonesia, which have seen their respective currencies, rupee and rupiah, crash over the week.
This month alone, India’s rupee has depreciated about 6.5% against the US dollar, while Indonesia’s rupiah has fallen by around 6.2% against the greenback.
India and Indonesia’s financial markets were the first two to be routed, as exit of foreign funds gathered momentum in recent weeks. There are reasons that these two markets were the first – and worst – hit. Both have huge and widening current account deficits, which reflect their dependence on external financing, and they also running on fiscal deficits.
India’s current account deficit, for instance, stands at around 4.8% of its GDP, while its fiscal deficit is around 4.9% of GDP.
Brazil has been the most volatile in terms of investor perceptions, the economist said.
“Between 2001 and 2004, many people told me I should never have included Brazil. Then, from 2008 to 2010, people told me I was a genius for including Brazil and now, again, people say Brazil doesn’t deserve to be there,” he said.
Brazil’s economic growth, which reached 7.5% in 2010, has been weak since then in spite of multiple government stimulus measures. The country seems doomed to growth of 2% or so in both 2013 and 2014, according to economists’ forecasts.
Brazil’s rapid growth in 2010 raised expectations, but many people forgot that the country is vulnerable to big moves in commodities prices, Mr. O’Neill said.
Another problem, he said, is that private investment remains a small share of the country’s gross domestic product. Brazil’s investment rate has been stuck at around 18% of GDP, the lowest level of any BRIC country, for a decade.
Brazil’s problems in recent years were compounded by the strong performance of the Brazilian real, which made the country uncompetitive outside of commodities, Mr. O’Neill said.
The trend for the Brazilian real has changed in the last few months and the currency recently slid to its weakest level in four years, amid slow growth, declining exports and high inflation. So far in 2013, the real has retreated 14% against the dollar.
The currency’s weakness has more to do with what’s happening outside of Brazil than inside, Mr. O’Neill said. A weaker real “will help Brazil into competitiveness,” he said.
His advice for the Brazilian authorities, who have shown unease with the rapid depreciation of the currency, intervening repeatedly to try to slow the real’s move, would be “relax,” he said.
“They should only worry if there’s a pickup in inflation expectations; otherwise, they should relax,” he said, before the central bank late Thursday unveiled a massive intervention program to provide relief for the currency.
Brazilian inflation is currently 6.15%, close to the 6.5% ceiling of the central bank’s target range for 2013.
Even in the face of weak growth, Mr. O’Neill says he doesn’t plan to add or subtract letters from his famous acronym.
“If, by the end of 2015, there is persistent weak growth in Brazil, India or Russia, then I might,” he said, noting, however, that he expects Brazil to surprise positively in 2015, possibly even in 2014.
Jim Roger opine that Brazil and Russian are just Commodity and resources economy and will be unsustainable.
Other prediction by Jim Roger's book including rise of Myanmar and North Korea. It is also interesting to read his prediction on USD.
奥尼尔：中国是目前唯一称得上的金砖国家
前
高盛资产管理部主席吉姆•奥尼尔(Jim
O'Neill)十多年前创造了金砖四国概念，但他承认除中国外，其他三个国家近年来的经济发展令他感到失望。2001年，以巴西、俄罗斯、印度和中国英文名称的首个字母组成了金砖四国的名称(BRIC)，它成为经济话语权向发展中国家转移的一个参考标志。
奥尼尔在接受采访时表示，如果他还能更改这个概念，只会留下中国一个国家。
奥尼尔补充说，人们不太清楚中国的经济规模。他称，如果中国经济像他预计的那样在今年增长7.5%，相当于额外创造了1万亿美元的财富；对于美国来说，如要达到这样的财富创造水平，其经济增长率也需要达到3.75%左右。
奥尼尔称，对于2011年至2020年，他预计金砖国家的平均年增长率为6.6%，低于之前十年的8.5%，而迄今为止，金砖国家的经济增长动能大多来自于中国。
他还表示，在金砖国家中，印度的表现最令人感到失望，而投资者对巴西的看法则经历了最为剧烈的变化。
他称，2001年至2004年期间，许多人告诉他金砖国家本不应包括巴西；而后在2008年至2010年，一些人士告诉他，将巴西纳入金砖国家的范畴是个非常明智的做法；但现在，人们再次告诉他，巴西称不上是金砖国家。
奥尼尔称，雷亚尔的强劲走势令巴西在大宗商品外的领域变得不具竞争力，从而加剧了该国近年来的问题。他表示，雷亚尔贬值有助于巴西提高竞争力。
