Moscow: The global crisis means China and other emerging market powers will overtake developed world economies even more quickly, the Goldman Sachs economist who coined the Bric concept told Reuters.
Goldman Sachs chief economist Jim O’Neill said China’s economy was now likely to overtake the US in less than 20 years time and the four Bric countries combined—Brazil, Russia, India and China—could dwarf the G-7, the seven most industrialized countries, over the same period.
“Their relative rise appears to be stronger despite the rather pitifully thought out views by some a few months ago that the Bric dream could be shattered by the crisis,” he said in a phone interview from London.
O’Neill invented the term Bric in 2001 when he forecast that Brazil, Russia, India and China would overtake some of the world’s top economies in the first half of the 21st century, becoming building blocks of a new world order.
“We now conceive of China challenging the US for No. 1 by 2027 and...the combined GDP (gross domestic product) of the four Brics being potentially bigger than that of the G-7 within the next 20 years,” he added. “This is around 10 years earlier than when we first looked at the issue.”
Goldman is forecasting that the world economy will contract by 1.1% this year while Bric economies will grow by an average of 4.8%, O’Neill added.
“They are dominating the world growth picture even more than when the world was booming, and this is despite a revised very weak forecast for Russia in 2009,” he said.
“China has had a good crisis. In terms of China’s role in the world the crisis has arguably been very helpful because it has forced China to realize that the next stage of their development cannot be led by export growth.”
Goldman is forecasting Chinese growth of 8.3% in 2009 and 10.9% in 2010, while it sees the world economy growing by just 3.3% next year.
India is predicted to grow at an average rate of 6.3% from 2011 to 2050, China 5.2%, Brazil 4.3% and Russia—constrained by forecasts of a declining population—just 2.8%.
The Bric countries have been trying to form a political club to convert their growing economic power into greater geopolitical clout. But it is unclear how such different countries will work together.
The leaders of Brazil, Russia, India and China will meet in the Russian city of Yekaterinburg on 16 June for the first summit since the international downturn struck their economies.
“Arguably because China is the biggest of the four in terms of its current size and potential, they are the ones who are most disinterested in the Bric grouping,” O’Neill said. “It is primarily Russia, but also Brazil, that is interested in having these get-togethers and meetings.”
O’Neill said Bric was unlikely to become a powerful political institution on the world stage but could serve a temporary purpose—to prompt reforms.
“I think Bric as an institution is a very useful threat and inter-temporal political grouping to force more realistic change of global institutions,” O’Neill said.
He said the G-8 should be reformed, with China, India and Brazil taking the places of euro zone members Germany, France and Italy, which he said should be represented by the European Union (EU) and European Central Bank. Russia is already a member of the G-8.