Either way, it seems the BRICs aren't quite the sure things they've
seemed to be since Goldman Sachs Asset Management Chairman Jim
O'Neill coined the term a decade ago.
Speaking at the Association of National Advertisers Finance
Conference last month, Eurasia Group consultant Larry Cristini and
PricewaterhouseCoopers consultant John Swadener outlined some major
shortcomings and worries for the "RIC" part of BRIC.
China and Russia both face questions about how exactly they'll
deal with their rapidly aging populations. China's aging population
has little pension safety net, Mr. Cristini said in an interview.
Its younger workers, even as they rise into the middle class, face
the growing burden of supporting their elders even as lower-wage
countries such as Vietnam, Indonesia and Malaysia threaten to
siphon some of the export-driven job growth.
Declining demand because of the financial crisis in the eurozone
further threatens China's exports. And while all that may hasten
the diversion of cash from China's well-capitalized state-run
enterprises into the country's consumer economy to fuel internal
growth, exactly how that will occur isn't yet clear, he said.
Russia faces a different dilemma, Mr. Cristini said, as Vladimir
Putin, having lost support from much of the country's emerging
middle class, relies on oil revenue to provide social programs for
an aging working class. The recent decline of oil prices amid a
global economic slowdown, however, makes that strategy harder to
India still has a rapidly growing population and middle class,
Mr. Cristini said, but has issues of its own: political gridlock
combined with a regulatory system that 's widely unfriendly to
outside global companies.
Of the four BRIC countries, Brazil has the best prospects, he
said, thanks to a balanced economy with a well-established
manufacturing base and oil wealth and a government inclined toward
tax and regulatory reform. But even Brazil faces slowing growth
because of a slowing Europe, U.S. and China.
Mr. Cristini counts Vietnam and Indonesia as top prospects --
the latter particularly, given its population of 240 million,
relatively stable political system and strong consumer base in
which two-thirds of gross domestic product goes to consumer
PwC expects compound annual growth rate for entertainment and
media spending in Indonesia of 11.9% through 2015, just ahead of
the 11.7% for the BRICs. In all, the "Golden Eight ," also
including Mexico, Colombia, South Africa, Middle East, North
Africa, Pakistan and Turkey, should see growth in entertainment and
media spending of 12.7% annually over the period, a full percentage
point ahead of the BRICs, according to PwC.
But downplaying the BRICs remains a decidedly minority view. "I
have to disagree with PwC," said WPP CEO Martin Sorrell in an
address to the ANA conference. "It's not about the absolute size of
the markets. It's about the delta that 's critical. If you're
trying to run a multinational company, you look for growth. And
China and the internet, or BRICs and clicks, give you virtually
100% of the delta, as long as Western Europe and the U.S. are such