The BRICs start with a B: Will Brazil be the next China?

O'Neill said China would become a major economic power, beating the United States in 2035 based on current economic growth. The economic power and influence of the BRICs is growing.

O'Neill's forecast is logical. The rise of the BRICs is changing the world structure and boosting the global economy. Previously, the world economy was dominated by North America, the European Union and Japan. Total GDP of BRIC in 2005 reached $ 4.6 billion, which is Japan's GDP. The BRICs are beginning to dominate the world economy. It is said that China is the most prominent of the four countries. It has maintained an average economic growth rate of more than 9.6 percent per year for the past 30 years. China's GDP rose to $ 2.23 billion in 2005, representing half the total of the four countries. Economic growth rates in India, Russia and Brazil exceed the Western countries and are above the world average. If the economy of the "golden bricks" of these four countries continues to grow at the current rate, O'Neill's prediction will come true in the near future. The rise in BRICs is also changing the world order. This is not only because of the BRICs' solid economic growth, but also because of its role as the initiator and motivator of the new international order. The four countries advocate the democratization of international relations, oppose hegemony and call for respect for global diversification. As developing countries, they have had the opportunity to learn from others and compensate for their own weaknesses.

The rise of the usgfx is changing the world structure and boosting the global economy. BRIC members deeply practice the style of international relations they have defended and are an example of friendly cooperation between different cultures. China and Russia, China and India, China and Brazil, and Russia and India have established strategic alliances. Russia is rich in energy and mineral resources, and Brazil has natural and alternative energy technology. Both China and India are manufacturing giants, and Russia-India relations will undoubtedly be complementary financially. The EMBI + (Emerging Markets Bond Index Plus) risk assessment for Brazil reached another record low of 170 bp in 03/2007. This reflects the increased confidence of foreign investors in Brazilian economic policy, which in turn proved reliable by paying up to $ 15.5 billion in debt from the IMF and raising a reserve of $ 110 billion.

The five key issues that we believe will shape the execution of the actions of the Brazilian market in the medium term are:

1. Integration of the new workforce into the global economy with rapid growth of the working-age population and average income, leading to the development of large urban consumer markets. In fact, from our point of view, the greater supply of labor in emerging markets in the global economy is the most important factor for the current global boom, much more important than the demand factors, such as the withdrawal of housing capital in the US UU. Or the Fed's simple monetary policy.

2. A continuous boom in infrastructure construction and energy demand in the New World, and therefore greater gains in commodity prices relative to prices of manufactured goods during the cycle.

3. New reductions in external debt burden and the tendency to strengthen the real exchange rate during the cycle compared to developed countries.

4. Increase in leverage in the domestic and corporate sectors and developments in capital markets, including mortgage markets, pension systems and liquidity curves in local currency.

5. Greater global consolidation of the industrial and service sectors, characterized by new market companies playing an improved role in industry management.

Clearly, there is still room for profit with Brazilian values, which compares P / E with that of other countries. We continue to believe in a slowdown in global growth in 2007. The main risks to our benign scenario of action include the potential escalation of geopolitical tensions, a collapse of the USD, a sharp rise in US Treasury yields. UU. And a sudden expansion of corporate debt disparities.