EM News: New ‘Tigers’ Will Dominate Economic Growth


By Gordon Platt

The BRIC countries—Brazil, Russia, India and China—now contribute more than half of the world’s economic growth, while the broader emerging markets provide more than 70% of current global growth.

Growth in the new tiger economies of Nigeria, Turkey and Indonesia will accelerate from a lower base, while growth in the bigger emerging markets will slow this year, economists say. Average growth in the BRIC countries will decelerate to 6.1% in 2012 from a high of 9.7% in 2007, according to the IMF.

The MSCI BRIC Index declined around 24% in 2011, with most of that decline occurring in the past six months. Investors withdrew about $15 billion from BRIC funds last year, according to EPFR Global.

“The slowdown we’re seeing in the BRICs will continue for most of the first half,” Goldman Sachs says in a recent report. Long-term growth in the BRIC countries will begin to drop as the population of working-age citizens begins to decline, it says.

“We have likely seen the peak in potential growth for the BRICs as a group,” Dominic Wilson, an economist at Goldman Sachs, says.

According to advisers at South Korea’s Mirae Asset Global Investments—one of the largest managers of emerging markets equities—net inflows to emerging nations could resume in 2012, as equity valuations remain attractive and inflationary pressures have abated. “We anticipate modest inflows once developed-market turmoil is contained and investor risk appetite returns to pre-crisis levels,” says Mirae advisers.