Another "I" in the BRIC Wall?
The acronym BRIC — which stands for Brazil, Russia, India, and China — was coined in a 2001 Goldman Sachs paper about quickly growing economies that could overtake the world’s wealthiest nations by 2050.
Almost a decade after the original report, the group has performed true to forecasts by outpacing the growth of industrialized nations by a wide margin.
Could it be time to add a new country to the set? Today there’s a case being made for Indonesia.
According to Bloomberg:
“’Indonesia’s potential is dramatic,’ says Hugh Young, who helps manage $260 billion, including Indonesian shares, at Aberdeen Asset Management Plc in Singapore. ‘It is resource- rich, has lots of people and some of its companies are as good as any you will find in Asia.’
“Indonesia’s $514 billion economy, the biggest in Southeast Asia, will grow at 6 percent this year, up from 4.5 percent in 2009, the International Monetary Fund forecast in April. That would make the nation of 240 million the best-performing economy after China and India among the Group of 20 countries — outpacing both Brazil and Russia, the two other emerging giants grouped with China and India as the so-called BRIC economies.
“Now, both Goldman Sachs Group Inc. and Morgan Stanley say Indonesia is a contender to be included in the BRIC club. Yet analysts disagree on exactly when the acronym will get an extra I. Chetan Ahya, a Singapore-based managing director at Morgan Stanley, says Indonesia should be considered for BRIC status if gross-domestic-product growth nears 7 percent next year.”
The 17,500-island archipelago nation has an economy that’s well positioned for growth from a geographic and natural resource perspective. It’s situated between China and Japan, which are its two largest export markets. In terms of commodities, it has a massive gold mine and copper reserve, and it’s a top global exporter in coal, palm oil, and natural gas.
However, the inventor of the BRIC term, Goldman Sachs’ chief global economist Jim O’Neill, believes that the Indonesian economy is probably too small to join the group quite yet. The current BRICs each make up about 3 percent of world GDP, whereas Indonesia is still only about 1 percent.
To read more you can visit Bloomberg’s coverage of Indonesia showing signs of life after austerity.