By Jim O’Neill
It is now more than eight years since we at Goldman Sachs first wrote about the BRIC concept—the idea that the emerging markets of Brazil, Russia, India, and China would come to play a new and more muscular role in the global economy. Throughout the period leading up to the collapse of Lehman Brothers, we often felt that the durability of the BRIC concept needed to be tested through an economic shock.
It is one thing to have strong growth when everything elsewhere seemed fine, but strength can only really be proven through less favorable external conditions. The recent turmoil certainly qualified as that, and the BRIC economies survived it well. Indeed, these days we think that the combined GDP of the BRICs might exceed that of the G7 countries by 2027, about 10 years earlier than we initially believed. So why has this crisis been good for the BRICs?
For China, it has forced changes in the country's previous, unsustainable export model. The decline in U.S. and European spending convinced Chinese policymakers that they must quickly stimulate domestic demand if they are to have any chance of maintaining their goal of annual GDP growth at 8 percent or higher. Already it looks like Beijing's swift and savvy stimulus plan is working. China will likely overtake Japan as the No. 2 economy in the world by the end of 2009. We estimate that within 17 years, China will also overtake the U.S.
BRICs are Still on Top
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