BRIC

Currently: 15% of G6

2025: 50% of G6

2040: >100% of G6

China> US in 2039

2050: China, US, India, Japan, Brazil, Russian, UK, Germany, France, Italy

India will have the largest GDP growth

Brazil and India will have less aging in population

Except Russia, GDP per capita in BRIC will still be less than G6

BRIC currency will appreciate (300% by 2050, China alone 100% in 10 years). 1/3 of the GDP growth is from appreciation.

Productivity will increase by adapting new techonologies

Low income per capita has weaker currency than predicted by PPP

Growth: population + capital + technology

India and Brazil have the weakest technology growth due to

worse education

Russian may have the worst population growth

Factors affecting growth:

Stable Macro-economy

1. Contained inflation
2. Responsible Fiscal and Monetary Polices (Brazil is not doing well)
3. Stable currency values
4. Accommodating government policies

Institutional Efficiency: (Russian has problem)

1. Education
2. Health Care System
3. Financial Market
4. Legal System
5. Government

Open Trade (India is slow)

Worker Education

Growth in BRIC will increase equity return and in turn increase the currency value due to higher demand