The economic and financial status of emerging market economies like India would continue to improve in the days to come and the recent downturn would help accelerate the trend, a Deutsche Bank report said.
“The (BRIC) economies’ increasing size will be making itself increasingly felt in the world markets, ranging from trade and investment to commodity markets,” the report said.
It added the economic and financial crises would help accelerate and intensify these trends. The BRIC economies of Brazil, Russia, India and China, already ranked among the top 10 on a PPP (Purchasing Power Parity) basis — a criterion for an appropriate exchange rate between two different currencies — are likely to clock significant growth in future.
The impressive economic growth rates and greater participation in global trade and financial flows by BRIC economies are re-shaping the global economic and financial architecture of these economies.
The rise of BRIC economies would alter the global political, economic and financial realities so much that China was likely to replace the US as the World’s largest economy by 2030, Deutsche Bank said.
Meanwhile, a separate survey by London-based independent think-tank Legatum Institute has indicated that India is likely to be the world’s most important economic power by 2030.
Deutsche Bank said continued global financial integration would turn BRIC countries into significant sources of foreign direct investment (FDI).
Also, their increasing economic weight is being felt politically, with countries like Brazil and India aspiring to be permanent UN Security Council members.
“China’s and Russia’s international status has been enhanced due to their substantial holdings of government-controlled foreign assets,” the report added.
At present, all the four economies carry at least one investment grade rating. BRIC economies are becoming a mainstream asset class and attract long-term strategic investment.
“BRIC countries will grow faster, their debt burdens and fiscal deficits are lower and their net external asset position is often more solid than that of developed markets,” the report said. However, the financial markets of BRIC economies lack the breadth and depth of their counterparts in the developed economies.
Regarding this, Deutsche Bank said BRIC authorities would continue to open their markets to international investors, “albeit gradually”.
