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Global Economics Paper No: 192
Goldman Sachs Global Economics, Commodities and Strategy Research at https://360.gs.com

The Long-Term Outlook for the BRICs and N-11 Post Crisis
The BRIC and N-11 countries are emerging from the crisis better than the developed world. As a result, our long-term projections for the BRICs look more, rather than less, likely to be realised. It is now possible thatChina will become as big as the US by 2027, and the BRICs as big as the G7 by 2032. Within the BRICs and N-11, China, Brazil, India, Indonesia and the Philippines appear to be performing best. Bangladesh, Egypt, Korea, Nigeria, Turkey and Vietnam form a second group of countries that have performed broadly in line with expectations. Iran, Mexico, Pakistan and Russia have need for improvement. Weshow the ongoing dramatic BRIC influence in key product markets, with autos and crude oil as examples.

Important disclosures appear at the back of this document

Thanks to Dominic Wilson, Michael Buchanan, Paulo Leme and Swarnali Ahmed for their valuable comments, and to Alex Kelston for the Growth Environment Scores

Jim O’Neill and Anna Stupnytska

December 4, 2009

Goldman SachsGlobal Economics, Commodities and Strategy Research

Global Economics Paper

Contents
Summary Section 1. Where We Stand on the BRICs and N-11 Section 2. The BRICs and N-11 in the Aftermath of the Crisis
2.1 BRICs and N-11 Global Importance Continues to Rise

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Higher growth contribution Increasing trade shares Rebalancing current accounts Domestic demand and economic resilience
2.2BRICs Market Performance in Context

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Deeper falls and sharper bounces in equities Currency performance Powerful new signs in terms of monetary policy

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Section 3. Our 2009 GES for the BRICs and N-11
Technology posts significant improvement; macro stability deteriorates Differential BRIC performance on GES Higher GES for seven of the N-11 countries GES and crisisperformance
Box 1. Where is the GES Heading?

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Section 4. How the BRICs Stand Compared with What We Predicted
Box 2. Some Key Things about Our 2050 Projections 4.1 Upside Surprises to Our Growth Projections

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Section 5. An Update on Crude and Cars
5.1 Higher Auto Market Potential in Brazil and India 5.2 China and Global Energy Demand

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Conclusion27

Issue No: 192

2

December 4, 2009

Goldman Sachs Global Economics, Commodities and Strategy Research

Global Economics Paper

Summary
The BRIC and N-11 economies, collectively, appear to be emerging from the global credit crisis better than the major economies. In fact, in some ways the crisis has been helpful in encouraging many of these countries to focus on domesticdemand—especially China. As a result, we think our long-term 2050 BRIC ‘dream’ projections are more, rather than less, likely to materialise. It is now possible that China could become as big as the US by 2027—in less than 18 years. In turn, the BRICs could become as big as the G7 by 2032, about seven years earlier than we originally believed possible. There has been quite a differential performanceboth within the BRIC economies and the N-11 compared with our expectations. Within the BRICs, in addition to China, Brazil and India have also performed better than we expected. Within the N-11, Indonesia and the Philippines have positively surprised. Bangladesh, Egypt, Korea, Nigeria, Turkey and Vietnam all performed broadly in line with expectations. Russia has experienced a very difficult crisis,which raises concerns about its long-term growth trend. Russia had performed better than our expectations until the crisis and, if it recovers strongly and quickly in 2010 and 2011, as we expect, we believe it will deserve its BRIC status. Iran, Mexico and Pakistan have—so far—all disappointed earlier expectations. As an example of the considerable impact of the BRIC countries on many markets,...