PARIS, France – The Philippines, Indonesia, Bangladesh and Ethiopia are now among the 10 countries that may soon take over as emerging economies possibly overtaking the BRIC nations, said a French credit institution.
“After 10 years of frenetic growth” the big 5 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% 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 development of emerging economies and their effects on the world trade flows are closely monitored by economist because they can have a big impact on different areas of the global economy as well as the balance of powers. 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% of the world population whereas the BRICS had accounted for 43% of the population in 2001. The overall gross domestic product (GDP) of the new emerging 10 was only 70% of the output of the BRICS in 2001, and they had a current account deficit of about 6.0% of GDP whereas the BRICS had run a surplus on average.
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Estimating growth and risk
On a positive side, the new emerging 10 had inflation which was about 2.8% points lower than BRIC inflation in 2001, and their public debt was about 40% of output compared with 54% 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 mentioned that the BRICS are now looking for other means because their exports are becoming less competitive, as also because they are also not that competitive in offering products with very high added value.
This is the reason why Coface aims to identify the upcoming driving emerging markets, monitoring for potential annual growth that exceeds 4%, a diversified economy without undue dependence on the sale of raw materials and some capacity to survive economic turbulence.
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.
Original Post: http://www.rappler.com/business/economy-watch/53919-brics-ph-emerging-countries
