We have certainly heard a lot about the BRIC nations over the past few years, and specifically how they were going to emerge as world powers. While Brazil and China appear headed towards that path, major setbacks in Russia and India have some questioning whether BRIC should really be CB. For more on this, read the following article from Money Morning.

When Goldman Sachs Group Inc. (GS) coined the term BRICs in 2003 to cover Brazil, Russia, India and China. This group of four countries was supposed to represent the enormous potential of the emerging markets, and their populations would provide most of the worlds growth in the decades ahead. For a year or two, Goldmans theory seemed to work and the BRIC acronym became immensely fashionable.

But now that the global downturn has hit, the four countries have diverged, and it is no longer clear what they have significantly in common. Money Morning actually raised some of these concerns in a two-part series that ran in August back even before the downturn reached crisis proportions, or analysts began questioning the BRIC concept. So lets revisit the four countries again right now, take a look at each one, and see for ourselves whether theres still any merit to the BRIC concept.

Brazil: Staying Strong

Brazil is one of the real economic success stories of the last six years. In 2003, it had just elected a socialist president and appeared close to default its membership in the BRIC group was highly tentative. The commodity boom of 2004-2008 was highly beneficial to Brazil, the countrys government worked hard to bring down the budget deficit, while its central bank kept interest rates far above the rate of inflation. Consequently, when the commodity bubble burst in mid-2008, the central bank was able to keep domestic demand growing by relaxing its interest rate policy.

Brazils economy as measured by gross domestic product (GDP) advanced at a 5.3 percent annual clip in 2008. The forecasting panel of The Economist only expects Brazil to grow at a 1.6 percent pace this year, but thats much better than most places. Its inflation rate is 6 percent too high, but at least it avoids deflation.

Brazils short-term interest rates remain suitably restrictive at 12.5 percent, and its stock market is down only 4 percent this year, which is more than investors can say for Wall Street.

Brazil remains a successful growth story, albeit at a moderate rate. Whats more, its oil company, Petroleo Brasileiro SA (Petrobras) (ADR: PBR), has found offshore reserves of oil that from 2012 (when production begins) onward seems likely to make Brazil one of the worlds premier oil exporters.

Whenever someone assembles a list of the worlds great growth economies no matter what parameters are used Brazil is virtually certain to be part of it.

Russia: Shooting Star Flames Out.

While Brazil has emerged as a success story, Russias early promise has given way to a somewhat bleak reality. Indeed, since that Goldman paper was written in 2003, Russia has been transformed from a successful emerging market into a corrupt kleptocracy without the rule of law and with only oil exports propping it up. Now that oil prices have dropped, Russia is in trouble. Its consumer prices are rising at a 14 percent clip on fudged official data, its currency is collapsing down by a third in the past year 3 and stock prices are down 80 percent from their high last spring. Even Russias population is declining.

The bottom line: Russia is neither emerging, nor a market. Unless oil prices recover rapidly, or the country undergoes a sudden conversion to secure property rights, it seems fated to remain impoverished, and to have its economic vigor diverted into military adventurism. It should be on nobodys list of growth opportunities.

India: Political Ineptitude Blunts Growth

India did well in 2004-2008, thanks largely to the reforms carried out by the Bharatiya Janata Party (BJP) government of Atal Bihari Vajpayee in 1998-2004. However, the current Indian National Congress-I (Congress) Party-dominated government has made almost no further reforms, and the Indian economic machine is showing clear signs of running down.

While 2009 growth is still expected to be around 5 percent, estimates of the consolidated budget deficit range as high as 12 percent of GDP. India is not China: It does not have the huge foreign exchange reserves to finance such a deficit. Thus, the rating agencies are considering downgrading Indias debt to junk status.

Given the financing difficulties India is likely to run into, it must be probable that growth will once again be thwarted by lack of foreign exchange, so that India reverts to the traditional Hindu rate of growth of 3 to 4 percent a growth rate thats nowhere near enough to lift its rapidly growing population out of poverty. Another election is to be held in the spring, but it seems unlikely that the BJP will win a government majority (Vajpayee has in any case retired) in which case the government overspending and opposition to reform of the last five years will continue. India would then remain an enormously frustrating enigma, a country with huge growth possibilities that is shackled by a corrupt and incompetent government.

China: The Leader of the Pack

My colleague, Keith Fitz-Gerald, has christened China as the main engine of world growth, and that role seems likely to continue in spite of the current difficulties the emerging Asian giant appears to be facing. Chinas government has pledged an enormous stimulus plan of more than $600 billion, far larger in terms of the Chinese economy than the U.S. counterpart proposed by American President Barack Obama.

However, with roughly $2 trillion in foreign-exchange reserves, huge domestic savings and a budget that is close to being balanced, it seems likely that China can afford its stimulus, and that by increasing domestic demand the stimulus will pull the country out of recession without causing excessive financing difficulties.

The aforementioned Economist panel expects China to grow at a 6 percent pace this year, but that number may well be conservative. Chinas shares are still down 60 percent from their peak, but they have risen by 20 percent this year and look attractive at these levels.

Thus, the BRIC group of emerging-growth economies has become merely a capital C, with a modest B trailing behind. There is some possibility of an I rejoining our growth acronym, but theres apparently no current hope for R.

In fact, when it comes to the BRICs, theres only one conclusion to reach: The acronym is broken.

http://www.nuwireinvestor.com/articles/china-and-brazil-all-thats-left-of-bric-52668.aspx

nice self as.s licking try .. keep it up ....

SURRENDER OF PAKI ARMY IN 1971
1N 1971 A NEW HISTORY AS WELL AS A NEW NATION WAS CREATED BY WE THE INDIANS..

GO CHINA! WOOT!

" THE WAYS OF CHINA WILL BE THE WAYS OF THE WORLD!"

When China is working on Chinese-style socialism, our Yankees are waling on the path of US-style capitalism. That's really funny things we are experiencing.

I feel very sorry for Russians. They really had very good chance to rebuild their country when the commodities were so expensive. Unfortunately, they spent a lot of money on Vodka, and some one's private pockets. Today, they still only has the defense industry and the resources industries left by Soviet Union. In the past 18 years, they lost the golden opportunities and achieved nothing. Sorry, I did put alot of hope on Russia before.

Brazil has a good future considering its plenty of resources and people.

The crisis is a challenge to our Chinese, but a very good chance for power transformation of this world. We are definitely moving to higher position quickly than many thought. US will stay as the NO. 1 for long time, but China will narrow the gap quickly.

the Other country in laughable BRIC is a joke who is dreaming to be a superpower.

Brazil's New Way
By TIM PADGETT AND ANDREW DOWNIE / SAO PAULO Thursday, Mar. 05, 2009
President Lula's fiscal reforms have been accompanied by social programs

Photograph for TIME by Claudio Edinger

Brazil is no stranger to economic crises. In the 1970s and '80s, Latin America's economic giant turned financial mismanagement into an art form. The current global turmoil has not left Brazil unscathed: stock prices, exports and growth are all down. But something interesting is at work this time around, and the best place to see it is in one of Brazil's favelas, the vast urban slums that are desperate even in the best of times. Walk through São Paulo's sprawling Brasilândia, though, and you don't sense the relentless doom and gloom gripping other cities in the world. Take Efigênia Francisca da Silva, who exudes middle-class expectations and remains positive despite the tsunami of bad news. Thanks to a government scheme to encourage entrepreneurs, the once dirt-poor housewife has received some $8,000 in low-interest bank credits in recent years and now owns three shops that sell everything from shampoo to public-transit tickets. "I didn't have a bank account before," says Da Silva, 37, standing beneath graffiti-covered walls and pirated power lines. "I never had a car. I bought a Fiat Palio." Does she fear the global recession will quash her dreams? "I trust Lula. I don't think we'll be hit that hard."


Lula, In His Own Words
"Lula" is President Luiz Inácio Lula da Silva (no relation to Efigênia), and most Brazilians believe he's the reason their country is surviving the current downturn better than other places. In past crises, Brazil was usually the nation in need of the largest life preserver. If it wasn't drowning under fiscal recklessness, it was being held under by draconian austerity plans. Brazil, the old joke goes, is the country of the future and always will be. Now, in the middle of the worst global downturn for decades, Brazil could finally be the country of the moment. According to a recent study by the Paris-based Organization for Economic Cooperation & Development (OECD), Brazil may be the only one of 34 major economies that avoids recession in 2009. While the U.S. debates whether to nationalize its crippled banks, Brazil's remain comparatively sound. Oil companies worldwide are slashing investment, but Brazil's state-run Petrobras is going ahead with a four-year, $174 billion expansion plan. "Brazil," Lula boasted to TIME, "is riding the current crisis better than many developed countries."

To be sure, the boom years of 5% growth and soaring exports is over. Industrial production has plunged. Even Embraer, the aircraft maker whose jets sell to scores of airlines, and which has become a symbol of Brazil's newfound confidence, recently announced plans to lay off 4,000 employees, almost one-fifth of its workforce. Commodity exports soybeans, steel are weak. The main stock market is down 25% since September. But Lula, a former shoe-shine boy who heads the leftist Workers Party (PT), has so far kept the good times from becoming a hellish bust. In Brazil, that's nothing short of miraculous.

There may be another miracle in the making. Because unfettered capitalism is widely blamed for the global meltdown, economists and laborers alike say Brazil has become an example of what Lula likes to call "the financial strategy of the future." By that he means a postideological approach that is equal parts wealth creation for corporations such as Embraer and wealth redistribution for underdogs like Da Silva. All this under the kind of prudent financial regulation that seems to have gone missing in the developed world of late.

Brazil still faces huge challenges; its education system is dysfunctional, its political system squalid, corruption endemic. But consider: 53% of Brazil's 190 million people now occupy the middle class, up from 42% in 2002. This increased social mobility happened at the same time the country's main stock index soared some 480% before last fall's downturn. Lula seems to have cracked Latin America's chronic conundrum: how to expand underachieving economies while reducing epic inequality. In so doing, he's created a model that's "an insurance ticket, not a lottery ticket," says Marcelo Neri, head of the Center for Social Policies in Rio de Janeiro.

All Change

In an interview last fall at the Planalto presidential palace in Brasilia, Lula, 63, told TIME that he wants to "change the world's political and economic geography" before he leaves office in December 2010. It may be futile to stump for a permanent Brazilian seat on the United Nations Security Council, but the developed world's financial shambles has made Lula's campaign to challenge U.S. and European hegemony in global trade talks less quixotic and enhanced Brazil's leadership role among developing nations. "Capitalism will be a different animal once the turbulence is over," Lula told TIME. "Developing countries will be responsible for a major percentage of world economic growth."

Twenty years ago, when Lula was a firebrand unionist, that sentiment might have been dismissed as dreamy rhetoric. Not today. However the crisis ends, there is widespread agreement that developing economies such as Brazil, China and India will be crucial to ensuring that demand remains buoyant. Lula, too, has changed. These days he's a pragmatist who is as popular inside corporate boardrooms as he is in the favelas. On March 17, he will meet new U.S. President Barack Obama a fellow moderate liberal who shares Lula's passion for green-energy ventures in the White House. He will be the first Latin American leader to meet Obama since he took office, a sign, perhaps, that the new U.S. Administration sees Brazil as a key partner in forging a new policy for the Americas.

That too would mark a change. Brazilian officials have long wanted to make a mark outside their neighborhood, but until recently, the world rarely noticed what went on there unless it involved beaches, soccer or Carnaval. "Brazil always suffered externally because of its internal poverty," says Lula's foreign-policy adviser, Marco Aurelio Garcia. The nation's founding monarchy, which lasted until 1889, insulated the country from the region's 19th century upheavals but also spawned a quasi-feudal class system that led to the inequalities that persist today. In 2000, fewer than 3% of Brazilians still owned more than two-thirds of the arable land, and the divide between the rich southeast and destitute northeast, where Lula was born, was as stark as ever.

Lula's predecessor, Fernando Henrique Cardoso, was the first President to recognize that change was needed. He restored fiscal sanity by slaying hyperinflation, but his attempts at social reform were timid. Lula's victory in 2002 panicked Wall Street and the Brazilian élite. But instead of defaulting on Brazil's foreign debt or busting the budget, as they feared he would, Lula embraced one of the few positive legacies of Brazil's royalist roots: deliberate, negotiated consensus-building. It's a hallmark of Brazil's widely respected diplomatic corps and it tempered Lula even when he was a metal-workers union boss in the 1970s. Unlike more radical Latin leftists, such as Venezuelan President Hugo Chávez, Lula "was always a negotiator," says union pal and former congressional Deputy Djalma Bom, who recalls Lula telling him to stop reading Lenin 30 years ago. Even rivals like Rubens Ricupero, a former finance minister and Cardoso ally, agree. "The danger with Lula is that he can be rather messianic," says Ricupero. "But he's one of the world's most intelligent politicians."

He does not like admitting it, but once in the presidency, Lula embraced Cardoso's macroeconomic orthodoxy. He then used that as a base on which to weld social programs, such as Bolsa Família, a grant scheme that has paid out more than $20 billion in aid to poor families in return for parents getting their children vaccinated and making sure they attend school. Brazil's business leaders insist record profits during the 2005-2008 boom allowed Lula to aid the poor; Lula argues his antipoverty crusade fueled the economic growth. It's a chicken-and-egg debate, in which both sides are right. What matters is that social stimulus programs like Bolsa Família have been matched by fiscal measures like a reform of Brazil's engorged civil service pension system. "It's called doing things right," says Lula. "Allowing the rich to earn money with their investments and the poor to participate in economic growth."

A Better Life
Whatever the explanation, the philosophy has done the President well. Two years into his second and final term, Lula has an 80% approval rating. This suggests that despite the recession, most Brazilians still feel they're winning. "It was very difficult to change social class in Brazil 10 years ago, or even four years ago," says Luis Minori of the market-research firm Ipsos. "Now people have access to microcredit and computers and other means of social mobility." In that sense Brazil has outperformed even China and India, Neri claims, because "poverty is falling [in those places] but inequality isn't."

Easier credit fueled a rush of small business start-ups and car sales (admittedly the last thing São Paulo's insufferable traffic needed). Even the wine market, once a purely upscale domain, has been democratized. São Paulo wine retailer Expand has seen sales of its mid-priced bottles jump 25% each of the past few years, and it has opened new stores in provincial cities like Fortaleza, where beer and cachaça (cane liquor) were once the only tipples. Expand's owner, Otávio Piva de Albuquerque, says he spends as much time helping secretaries find $12 Concha y Toros as he does stockbrokers $75 Chambertins. "So many things Brazilians used to think of as unessential," he says, "are suddenly part of life here."

The downturn has slowed growth, but it has not stopped it. To make Brazil even more business-friendly, the government is spending $263 billion on tax breaks and infrastructure. Like Lula's social projects, the Growth Acceleration Program, which began in 2007, was funded largely by high commodity prices, most of which have now plummeted. But Brazil seems to have invested the windfall smartly. Exports have been diversified so as to reduce reliance on commodities, and before the downturn the nation socked away a record $208 billion in foreign reserves. The banking system has remained well regulated, and so far seems to have been less exposed to the toxic assets that have wrecked many U.S. and European banks. All this has "buffered Brazil quite a bit against the global downturn," says Paulo Leme, emerging-markets director at Goldman Sachs.

Then there's oil. In 2007 and '08, state-controlled Petrobras discovered up to 12 billion bbl. beneath the Atlantic floor about 155 miles (250 km) off the coast of Rio de Janeiro. The oil lies almost 3 miles (5 km) below sea level and is covered by a thick layer of salt, so extraction will be a massive undertaking. And while the discovery promised a windfall when oil was $140 per bbl., at today's price of $40, profitability will be a challenge. Nor is oil always the blessing that it appears; in nations from Nigeria to Saudi Arabia, its promise of easy money has crowded out other sectors of the economy, and fed corruption, too. But Lula, who keeps a jar of oil from the recent find by his desk, along with others filled with exotic beans and plants developed for biofuels, sees the oil as another resource to help end poverty. "God," the President crowed after the discovery, "is Brazilian."

If he is, of course, others will want to listen to him. Lula was one of the few leaders with whom both U.S. President George W. Bush and Venezuela's Chávez had decent relations. Lula told TIME he has "high expectations" that Obama will turn "a new page" on Latin America and "put aside traditional U.S. insistence on a narrow, one-sided approach that focuses almost exclusively on free trade and the drug war." Like most Latin leaders, Lula wants Obama to lift the U.S. trade embargo against Cuba. And he is keen (he may be disappointed) to see the U.S. throw its weight behind a last effort to save the Doha round of world trade talks, which could offer farm-export nations such as Brazil new opportunities.

For all the new confidence that Brazil is showing abroad, there's a lot to fix at home. Aside from corruption, Brazil's public bureaucracy is one of the world's most wasteful. Education, despite increased funding and access, is an embarrassment: students consistently score near the bottom of international math, science and reading tests. Exorbitant taxes and violent crime scare off foreign investors, and in the Amazon, deforestation remains a problem.

But Lula, like the brawny, business-minded megalopolis he has made his home, has set a sturdy example. São Paulo's vast, stalagmite horizon of skyscrapers can't match the glamour of Rio de Janeiro, but the city of 20 million people is a truer and smarter reflection of Brazil's bandeirante (pioneer) character. This year, work will start on the hemisphere's first bullet train, which will eventually link the two cities. High-speed rail won't mask all Brazil's flaws. But it does show, perhaps, that the country of tomorrow has a brighter future.
http://www.time.com/time/magazine/article/0,9171,1883301-1,00.html

As I remember the biggest problem for Latin American countries were the finance, in other words, the heavey debt. I think Brazil's situation should be improved a lot due to the long time high commodity price. Brazil has a large population, but such a huge land and resources That our Chinese are dreaming of, it has resources and good industry foundation. I always rate Brazil very high. The only problem is the US. US does not like to have a strong latin american country beside.

"India did well in 2004-2008, thanks largely to the reforms carried out by the Bharatiya Janata Party (BJP) government of Atal Bihari Vajpayee in 1998-2004. However, the current Indian National Congress-I (Congress) Party-dominated government has made almost no further reforms, and the Indian economic machine is showing clear signs of running down."



But India is not that pullin behind as the article makes out to be.





colours of Kaziranga

Please explain why did you think this is not so.

"As I remember the biggest problem for Latin American countries were the finance, in other words, the heavey debt. I think Brazil's situation should be improved a lot due to the long time high commodity price. Brazil has a large population, but such a huge land and resources That our Chinese are dreaming of, it has resources and good industry foundation. I always rate Brazil very high. The only problem is the US. US does not like to have a strong latin american country beside."

True, along with inflation they have severely plagued Latin American economies. Difference is now we have some wiggle room, with interest rates at 12.5% we can reduce significantly since inflation is also under control. That said, long term problems like education and government bureaucracy will persist. The education system in Brazil is a disgrace and were one of the most bureaucratic countries in the world. To put things into perspective, to get through all the red tape it can take over 200 days to set up a business.