Brazil and Russia were the two biggest disappointments among the BRICS, a group also formed by India, China and South Africa, two decades after the creation of the term to designate these emerging economists.
The sanctions imposed on the Russian government after the invasion of Ukraine tend to worsen a trajectory that was already unfavorable for the two countries even before the war.
As a group, the five economies already account for almost a third of the world’s GDP, but this result is mainly due to the performance of China and, to a lesser extent, that of India.
The acronym Bric (a word that also means brick, in English) was created by economist Jim O’Neil, of the bank Goldman Sachs. In a paper published in late 2001, he outlined growth scenarios for Brazil, Russia, India and China.
The Brics, in the plural, ended up becoming an organized group from 2009 onwards, which also includes South Africa since 2011.
O’Neil estimated in 2001 that the weight of these emerging economies in world GDP would rise from around 20% to 27% in the following ten years. By the IMF (International Monetary Fund) metric, it reached 26.8% in 2011 and 31.2% in 2021.
For Brazil and Russia, the economist estimated an average annual growth of 4% in the following years. The effective result from 2002 to 2021 was 2.2% and 3.1%, respectively.
India grew by 6.6%, above the estimated 5%. China had an annual expansion of 8.7%, exceeding expectations of 7%
Brazil’s share should reach 3.2% of world GDP. It currently stands at 2.4%.
In an article published in September last year, O’Neil stated that the first decade of the century was a successful one for the four countries. All performed better than projected. In the second decade, the shares of Brazil and Russia in the world GDP regressed.
In 2017, O’Neil already stated that “Brazil and Russia were big disappointments” and that the acronym should just be IC (India and China). That year, the Brazilian economy had just emerged from one of the biggest recessions in history, while the world continued to grow. In the following years, the country entered a low growth rate, of 1% per year on average, which has been maintained until today.
On average from 2022 to 2026, Brazil’s growth rate should double, but it will still be half that predicted by the economist over 20 years ago, according to projections collected by the IMF.
Estimated measures indicated that Russia should maintain the pace of growth at around 3% per year in the same period. The sanctions applied to that economy because of the invasion of Ukraine, however, should change that scenario.
A survey carried out by the Central Bank of Russia with economists shows that inflation in the country is expected to accelerate to 20% and that the economy may contract by up to 8% this year.
JP Morgan also estimates that Russia’s GDP could contract by 8% in 2022, followed by a near-zero result the following year.
The US, for example, has banned the import of Russian oil and gas. Russia has also been excluded from the international bank transfer system, and several foreign companies are ceasing to operate in the country.
Within the BRICS, reactions have been less unfavorable. Of the other countries in the group, only Brazil voted in favor of a UN (United Nations) resolution condemning the invasion. The others abstained.
China avoided condemning Russian President Vladimir Putin for the invasion, but criticized international sanctions imposed on the country.
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