As global growth picks up, ten emerging countries in two new budding blocs have surfaced with the potential power to unseat the top two economic groupings of developing countries as emerging-economy leaders and drivers of global economic growth.

Brazil, Russia, India and China (Bric) – excluding South Africa, which is known as Brics – and the Mexico, Indonesia, Nigeria and Turkey (Mint) groups of countries were set to give way to Colombia, Indonesia, Peru, the Philippines and Sri Lanka, or the CIPPS, and Kenya, Tanzania, Zambia, Bangladesh and Ethiopia (KTZBE).

The “top ten” emerged as strong players – resilient to the growth slowdowns weighing on many countries – set to lead the way in global economic growth as some large emerging markets, mainly China, Brazil, Russia, and Turkey, were expected to slow sharply this year after a decade of rapid growth, international credit insurer Coface South Africa lead analyst Saijil Singh said on Thursday.

Speaking at the Coface Country Risk Conference, in Randburg, he explained that, despite favourable consumer trends, Bric growth had been hampered by a marked slow-down in investment and supply constraints.

Coface forecast growth of about 3.2 percentage points lower than the average growth these countries registered over the previous decade.

The new top ten, which would experience gross domestic product (GDP) growth of between 5.5% and 6%, would also be able to leverage the extensive benefits of the bordering Bric countries.

As the Bric countries grew, skills and knowledge had crossed the borders, as had industrialisation on the back of favourable cross-border trade agreements, amid a range of other benefits, which further boosted potential, particularly that of the CIPPS.

With the CIPPS’s strong potential confirmed by a “sound business climate” – similar to that of the Bric countries today – development was accelerating in diversified economies resilient to growth slowdowns.

These countries boasted good production prospects and sufficient funding capacity to support expansion without the risk of creating a credit bubble, as well as positive infrastructure developments, improving financial systems and improved socioeconomic and education policies.

The five nations of the KTZBE were also poised to contribute to global growth should economic conditions improve.

While the KTZBE boasted similar criteria to the CIPPS in terms of good growth and resilience to global shocks, infrastructure limitations and political threats amid “very difficult” business environments weighed on growth prospects.

The grouping also faced a lack of beneficially structured trade agreements, poor socioeconomic and education policies, and was still developing financial systems and policies. But there were indications of increased stability and upward growth trends.

“Naturally, it will be more difficult for the second group of countries, which could take longer to fully realise their growth potential. However, their business environment problems are relative; in 2001, the quality of governance in Brazil, China, India and Russia was comparable to that of Kenya, Tanzania, Zambia, Bangladesh and Ethiopia today,” added Coface head of country risk Julien Marcilly.

NEW PATH
However, it was likely that the growth of the ‘new emerging’ countries would take a different path than Bric had.

“The ten identified new emerging countries currently only represent 11% of the world’s population, while Bric accounted for 43% of the population in 2001,” explained Marcilly.

He added that the ten countries’ GDP level was only 70% of that of Bric in the same year and that Bric recorded on average a current account surplus while the ‘new emerging’ countries had a 6% GDP deficit.

“With growth in developed countries being structurally weaker today, the new emerging countries may benefit less from trade towards these countries than Bric [did] in the 2000s. Their growth rates will depend more on their domestic markets and on exports to other emerging markets," said Marcilly.

He concluded that, despite a “less buoyant” environment, the new emerging countries had advantages over the Bric of 2001, in that their inflation rates registered 2.8 points lower and their level of public debt was about 40% of GDP, compared with the 54% recorded by Bric in 2001.