“After 10 years of frenetic growth, BRICS are slowing down sharply: for 2014, Coface forecasts growth of on average 3.2 points lower than the average growth these countries registered over the previous decade,” said Coface, the international credit insurer, in a statement.
“At the same time, other emerging countries are accelerating their development. Among them, a ‘top 10’ emerges with good production prospects and sufficient financing to support expansion.”
The company further explained that the BRICS are experiencing a growth downturn due to a slowdown in investment, as well as local businesses being unable to meet production supply with strong demand.
(WATCH VIDEO: The progress of BRICS countries)
Coface has identified ten new emerging countries based on their accelerated growth, economic diversity, resilience and on whether they have sufficient funding capacity to finance growth without the risk of creating a credit bubble.
The countries are however placed in two different categories.
Colombia, Indonesia, Peru, the Philippines and Sri Lanka are recognised as having sound business climates, similar to that of the BRICS countries.
(WATCH VIDEO: MINT set to challenge BRICS in terms of global growth)
Kenya, Tanzania, Zambia, Bangladesh and Ethiopia, on the other hand, are also identified as new emerging countries but have difficult business environments which could hamper their growth prospects.
“Naturally, it will be more difficult for the second group of countries, who 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,” explained Julien Marcilly, head of country risk at Coface.
The company stated that the growth path for the 10 new emerging countries however will be different to that of the BRICS.
For example, the 10 new emerging countries currently only represent 11 per cent of the world’s population while the BRICS accounted for 43 per cent of the population in 2001. Secondly, their gross domestic product (GDP) level is only 70 percent of that of the BRICS in 2001.
The BRICS also recorded on average a current account surplus while the new emerging countries run a deficit of around 6 per cent of GDP.
“With growth in developed countries being structurally weaker today, the “new emerging” countries may benefit less from trade towards these countries than did the BRICS in the 2000s. Their growth rates will depend more on their domestic markets and on exports to other emerging markets,” concluded Marcilly.
Despite this, the new emerging countries have inflation rates around 2.8 points lower than that of the BRICS and their level of public debt is around 40 per cent of GDP, compared to the BRICS’ 54 per cent.