BRIC Economies: Back on Top?

Thankfully for Brazil and Russia, the rebound in commodity markets is starting to impact their respective economies with improving economic data

Dan Kemp 23 August, 2016 | 8:00AM

Yesterday’s market darlings, Brazil, Russia, India and China, have failed to ignite the emerging market index despite their significant contribution to global GDP growth. In fact, the emerging market index has underperformed developed markets over the past decade despite the latter having less than half the economic growth.

To put this in perspective, the economic growth of India and China have created more than 45 “Greece’s” in the past 12 months alone and rank as the sixth and 15th fastest growing economies for 2015 and 2016, of the 191 countries assessed by the World Bank. Russia and Brazil have not fared so well, and have failed to live up to their pre-GFC hype, with another disappointing result for 2016 looking inevitable to put them in the bottom quintile at 187th and 186th positions respectively.

Thankfully for Brazil and Russia, the rebound in commodity markets is starting to impact their respective economies with improving economic data. We have seen the leading indicator trends looking particularly attractive in these regions, albeit from low levels, and PMI survey data is the strongest it has been in a year. Time will tell whether this translates into tomorrow’s winning economies, although it is interesting to see the markets are embracing the optimism with the emerging markets outperforming.

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About Author

Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA

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