London : Bric economies will continue to grow over the current global financial crisis, paving the way for major shifts in global capital over the coming decade, Ernst and Young’s ITEM Club said Monday.
The economic forecaster said Bric economies – comprising Brazil, Russia, India and China – will account for 40 percent of global economic growth between 2009 and 2020.
China will account for a quarter of this growth and will become the world’s biggest economy in purchasing power parity terms by 2019, excluding currency fluctuations. Previous forecasts had predicted that China would not reach this point until 2025-2030.
The ITEM club said 77 percent of the world’s cash reserves – totalling almost $7 trillion – are being held by emerging markets, adding that even if the oil price stays at only $60 a barrel over the next five years, assets held by sovereign wealth funds could increase five-fold to $15 trillion by 2013.
“Whilst it is not inevitable that the global growth dynamics of the past decade will continue indefinitely, the strong domestic momentum in the large emerging economies, the productivity gains from their continued integration into the global economy and benefits from improved macro and micro economic policies will mean that the next decade sees an impressive rate of expansion,” said Adrian Cooper of the ITEM Club.
“Consumers around the world are getting rich,” he added.
The group said Bric countries, led by China, will account for 65 percent of global basic metals output by 2020, 38 percent of the world’s chemicals, 30 percent of vehicles and 28 percent of electronics production.
Although economic activity in Britain, Europe and the US is forecast to slow, or shrink in some cases, China’s growth is not tipped to go below 6 percent a year, implying quicker catching up with the US.