Market Overview

Goldman Sees the BRIC In The G7

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It's no secret that the four BRIC nations of Brazil, Russia, India and China are growing their economies like weeds. When Jim O'Neill first created the group in 2001, much of their growth stories were still unknown. Today, a quick Google search and investors can find hundreds of stories about the four horsemen of the emerging markets. However, investors may be taken back by Goldman Sachs' latest prediction; the collective GDP of all four BRIC countries will overtake that of the U.S. by 2013.

In a monthly report to investors, the bank said that current BRIC GDP is worth just over 75% of United State's GDP and that all four countries will be among the ten largest economies in the world by the end of this year. Built on the backs of strong currency gains, low relative debts, and a growing consumer basis, over the past three years the BRIC's have contributed about 50% of global economic growth. Between 2000 and 2007, the BRIC contributed just 27%.

Earlier this year China surpassed Japan to become the world's second largest economy, and Brazil passed Spain, Italy and the U.K. to reach the fifth spot. Both India and Russia have leapfrogged Spain to secure ninth and eleventh positions, respectively.

For investors, the continued domination of the BRIC highlights the need for emerging markets in a portfolio. These four countries can be accessed directly via the SPDR S&P BRIC 40 (NYSE: BIK), iShares MSCI BRIC Index (NYSE: BKF) and Guggenheim BRIC (NYSE: EEB) exchange traded funds.

 

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