Research Analysis United Kingdom

BRIC economies to lead the way

LONDON, UK: BRIC economies are expected to account for 40% of world GDP growth over 2011 and 2012, says PwC economists.
BRIC economies to lead the way

  • The G7 economies will contribute less to world GDP growth in the next two years than the BRIC economies
  • Eurozone growth expected to slow as Sovereign debt crisis threatens to engulf Italy and Spain

Fast-growing BRIC economies (Brazil, Russia, India and China) made up just 17% of global GDP in 2010, but are expected to account for 40% of world GDP growth over 2011 and 2012, according to a PwC report launched on 4 August 2011, "Economic Views - Global". This compares to the G7, where a sluggish recovery means they are likely to account for just 34% of global growth over 2011 and 2012.

Confidence in the Eurozone economic recovery continues to struggle as the Greek debt crisis has deepened and threatens to spread to Spain and Italy, according to a second PwC report launched today, "Economic Views - Eurozone".


"Economic Views - Global" outlines several key opportunities which could contribute to the recovery of the global economy including the reconstruction phase in Japan, the expected expansion of global trade, high end manufacturing in developed markets and increased spending by consumers in emerging markets.

The report also outlines several issues which threaten to dampen global economic recovery further, including fiscal consolidation in the developed world, monetary tightening in emerging markets, and the uncertainty caused by the Sovereign debt crisis.

Richard Snook, a consultant in PwC's macroeconomics team, commented: "The world economy is set to slow in 2011. We expect growth to ease to 3.2%, following on from 4.0% in 2010. The key headwinds to growth will be fiscal consolidation and private sector deleveraging in the developed world, whilst emerging markets are tightening monetary policy to rein in inflation.

"The slowdown in some key developed markets and the tightening of monetary policy in emerging markets has impacted negatively on global trade and industrial production volumes. "We expect 2012 will see global growth bounce back to 3.6%, as trade rebounds, consumer spending picks up and the economic uncertainty surrounding events such as the Sovereign debt crisis ease."


Eurozone growth in Q1 2011 beat expectations, with a quarter-on-quarter expansion of 0.8% on the back of a buoyant German economy. However, we expect that the sovereign debt crisis and interest rate rises implemented by the European Central Bank may cause growth to ease in the second half of the year and into 2012.

On the Eurozone economic view, Richard Snook, a consultant in PwC's macroeconomics team, commented:

"Despite the strong economic growth recorded by core Eurozone countries in the first quarter of 2011, we expect growth to ease in the remainder of the year and into 2012. Our latest projections are for the Eurozone economy to expand by 2.0% in 2011 and 1.7% in 2012. The Eurozone is likely to continue experiencing a "two-speed" recovery over the medium-term, with periphery countries posting sluggish growth amid rising debt costs and further austerity measures.

"The recent interest rate rises implemented by the European Central Bank will weigh on growth somewhat, but the key risk is that the Sovereign debt crisis will spread to the larger economies of Italy and Spain. Yields on the government bonds issued by these counties have recently been close to 14 year highs - prompting concern amongst policy makers."


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