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• • • • • Rahool Jindal Rohan Sariya Saransh Pansari Vaibhav Jain Vaibhav Mandhyan B011 B013 B019 B036 B037
• Confined progress in the 20th century • Scenario completely changed in the beginning of the 21st century • The combined GDP of the emerging economies accounts for more than half of the total GDP of the world. • The impact of the growth of emerging economies is visible on developed countries
• global exports which have doubled to over 45% from 20% in thirty years • Emerging economies have more than threefourth of the foreign-exchange reserves • consume more than half of the world's energy • account for over 80% growth in oil demand for their consumption • The high growth of the emerging economies has increased the global GDP by an average of 3.2% a year
Why is BRIC a emerging economy? .
BRIC: The fastest growing Nations .
Developed countries investing in BRIC .
Strong BRIC by bric .
BRIC: Investing abroad .
Policy rates & Exchange rates .
Rich Vs Poor .
Future of BRIC .
BRIC .Countries .
Elements that contributed to emergence of these economies • Key elements are 1. 2. Peace and stability Infrastructure investment A functioning financial system Free market policies . 4. 3.
Elements that contributed to emergence of these economies • Peace and stability ▫ Businesses feel confident ▫ China and India • Sri Lanka and Afghanistan ▫ Ravaged by civil strife ▫ Development slow .
Elements that contributed to emergence of these economies • Infrastructure Investments ▫ Education and transportation ▫ Example: Indian railways .
Elements that contributed to emergence of these economies • A functioning financial system ▫ Independent central bank ▫ Laws and regulations .
Elements that contributed to emergence of these economies • Free market policies ▫ Favor open markets and free trade ▫ Example: China. promoted capitalist principles ▫ Example: Economic reforms in India . a socialist economy.
0.Brazil • • • • • • • • • Official Language .Portuguese Type of Government .$2.Brazilian Real (R$) Conversion Rate .1 R$ = 28.718 .8.514.Market Economy Currency .190.694 (2010) GDP nominal .Federal Republic Economic System .422 trillion HDI .732.877 km2 Population .82INR (02/02/2012) Area .
Brazil – Statistical Data Budget expenditure Budget revenue $434.edu .golbaledge.A.msu.1% (2009) 101. currently an international creditor Source: www. $127.70 billion (2009) $153.5% (2010) 8.00 billion (2009) 7.9% (Dec 2011) 26% (2008 ) Negative.70 million (2009) 0.80 billion (2011) Debt External Import Export GDP growth rate Unemployment rate Labor force Industrial Production growth rate BPL Debt to GDP ratio N.90 billion (2011) $354.
economic growth and social programs helped lift tens of millions of Brazilians out of poverty. • Middle class and domestic consumption .5% growth in 2010 • Surging exports.Economy • World’s 8th largest • Government-initiated privatization in 1996 • Transition from a regional to a global power ▫ Strong and early recovery from the financial crisis ▫ Solid performance 7.Brazil .
and other infrastructure sectors over the next few years.Brazil .Economy • Economic boom and high interest rates ▫ Attracted foreign currency inflows ▫ Value of the currency (the real) up by nearly 40% since the start of 2009 • Encourages foreign investments ▫ Largest recipient of FDI in Latin America ▫ USA top foreign investor • Government plans to invest billions of dollars in off-shore oil. . nuclear power.
iron ore. . and petrochemicals. with significant operations in lumber. sports facilities. airports. and other areas.Economy • Hosting major International athletic competitions every year until 2016 Rio Olympics ▫ Government to investing in roads. tin.Brazil . other minerals. • Major supplier of commodities and natural resources.
Economy • Trade Policy ▫ ▫ ▫ ▫ ▫ ▫ Expanded ties with developing countries Strengthening of MERCOSUR custom union Recent FTAs with Israel and Egypt Negotiating with Mexico. becoming Brazil's principal export market and an important source of investment. Canada and EU Trilateral trade agreements with India and SA China has significantly increased its purchases of Brazilian soy. and steel in recent years. .Brazil . iron ore.
cocoa. frozen concentrated orange juice ▫ Largest commercial cattle herd (50% larger than that of the U.Brazil .) at 170 million head ▫ Important producer of soybeans (second to the United States). corn. tobacco.S.Economy • Agriculture ▫ ▫ ▫ ▫ Key for economic growth and foreign exchange 6% of GDP (25% including agribusiness) 36% Brazilian Export Largest producer of sugarcane. coffee. and forest products . tropical fruits. cotton.
Brazil .Government • Head of Government: President Dilma Rousseff • Political conditions ▫ Relations are generally difficult between the executive and the legislature. as well as between federal and state governments ▫ Switching of parties is high .
and Japan are primary markets for Brazilian exports .Government • Foreign Relations ▫ High priority to expanding relations with its South American neighbours ▫ Contributed troops to UN peacekeeping efforts ▫ 2010 – 2011 served as non-permanent member of UN Security Council ▫ Creditor country to the International Monetary Fund (IMF) ▫ U.S. Western Europe.Brazil ..
port. and airport infrastructure ▫ High public debt exposed to domestic interest-rate trends and maturity that is still too short ▫ Vulnerability to external shocks ▫ Lack of skilled labor .Brazil – Strengths and Weaknesses • Strengths ▫ Abundant and varied natural resources ▫ Significant proportion of manufactured products in total production and exports ▫ Policy of maintaining fundamental macroeconomic equilibrium ▫ Size and potential of the domestic market ▫ Competitive labour costs (R$ 465/month in 2009) ▫ Continuation of inflation targeting policy • Weaknesses ▫ Lack of investment in energy. road. rail.
81 $16.88 $198. Minerals.81 Market Value $190.78 $145.Corporations Industry Sales Profits Assets •Name 5 companies (values in $ billion) Top Petrobras Itaúsa Banco Bradesco Banco do Brasil Vale Energy Financial Services Financial Services Financial Services Mining.34 $28.63 $2.74 $54.26 $342.25 $4.50 $42.36 $59.14 $66.10 $27.46 $100.82 $5.63 $281. Metals $104.60 $5.Brazil .40 $406.82 Source: Forbes 2010 .10 $56.
2011 .Brazil – Various Rankings • Ease of doing business – 126 (183) • Control of Corruption Indicator – 89 (203) Source: World Bank Report.
• India’s major trade items to Mercosur include: ▫ Drugs. metal scrap and nonelectrical machinery.Trade agreements with India • Preferential Trade Agreement with Mercosur group Argentina Brazil Paraguay Uruguay • In effect since June 1. 2009 • Agreed to reduce duty by 10 to 100 per cent in 450 products that are traded. pharmaceuticals and fine chemicals • Major imports from the South American trade block: ▫ Edible oils (primarily soya bean). • MoS for Commerce and Industry estimates ▫ $17 billion by 2012 and $30 billion by 2030 .
Corporations Industry Sales Profits Assets •Name 5 companies (values in $ billion) Top Petrobras Itaúsa Banco Bradesco Banco do Brasil Vale Energy Financial Services Financial Services Financial Services Mining.63 $2.25 $4.74 $54.14 $66.88 $198.34 $28.46 $100. Metals $104. Minerals.40 $406.81 Market Value $190.81 $16.82 $5.26 $342.63 $281.78 $145.60 $5.82 Source: Forbes 2010 .50 $42.10 $27.36 $59.10 $56.Brazil .
Russia • • • • • • • • Capital: Moscow Official language: Russian Type of government: Federation Currency: Rubles(RUB) Area: 1.D.P(PPP): $2.I: 0.D.37 trillion H.7 crore sq km(largest country) Population: 140 million G.755 .
Budget expenditure Budget revenue Debt External Import Export GDP growth rate Unemployment rate Labor force Industrial Production growth rate BPL
15.8% $303.60 billion $231.10 billion $369.2 billion $191.8 billion $303.4 billion 3.8% 8.4% 75.81 million
Debt to GDP ratio
• Main exports: Oil and oil products, natural gas, wood ,chemicals,metals, weapons and military equipment • Main imports: Passenger vehicles ,Trucks, medicines,communication equipment (phones,fax),heavy equipment
• Has enjoyed 9 yrs of sustained growth(7%) after the 1998 crisis.Key reasons:
▫ Economic reforms ▫ Devalued Ruble ▫ Favourable commodity prices
• Was severely affected by global recession • However on path of recovery due to
▫ Govt’s anti-crisis policies ▫ Rise in oil prices
• President: Dimitry Medvedev • Prime minister: Vladimir Putin • Political conditions: Stable
▫ Presidential elections in March 2012 ▫ Mr. Putin contesting for third term
• Foreign relations:
▫ Agreements with Western countries ▫ Troubled relations with neighbours(Georgia conflict in 2008)
gas. and metals ▫ Skilled labor force ▫ Political stability ▫ Lower tax rates ▫ Highly dependent on raw material prices(2/3rd export is of oil) ▫ Excessive private sector foreign debt ▫ Banking sector still very weak ▫ Underdeveloped Infrastructure • Weaknesses .RISK • Strengths ▫ Abundant natural resources including oil.
Corporations Company Gazprom Sberbank Lukoil Industry Oil & Gas Operations Banking Oil & Gas Operations Market Cap(2011) $190 billion $77 billion $57 billion .
including pharmaceuticals and animal products ▫ Simpler visa norms • As per Commerce Ministry.Agreements with India • A MOU for Joint Study Group signed in 2006 to enhance bilateral trade • No FTA at present but negotiations are on • India’s demands include(till there is no FTA): ▫ Greater access to some sectors.India to push for an early start to discussions on the proposed FTA .
India • • • • • • • • Capital .D.Indian Rupee Area .1.287.D.0.210.$1.New Delhi Official language .P(nominal) .I .263 km2 Population .3.Federal Currency .Hindi.843 trillion (IMF) H.422 (census 2011) G. English Type of government .193.547 .
Statistics Budget expenditure Budget revenue Debt External Import Export $311.5% (2010-2011) 9.2 billion GDP growth rate Unemployment rate Labor force Industrial Production growth rate BPL Debt to GDP ratio 8.4% (Economic Times) 25% 70% .8% 487.1 billion $451 billion $298.6 million 3.7 billion $267.2 billion $218.
.Economy • India is the 9th largest economy by market exchange rates • Averaging an economic growth rate of 7. the agricultural sector 28%. • India has fared the global financial crisis remarkably well • Widespread poverty. • Per capita income is just Rs 53. limited non-agricultural employment opportunities.331 which is ranked 135th in the world. insufficient access to quality basic and higher education are the main challenges faced in India. inadequate physical and social infrastructure. and the industrial sector 18%.5% during the last few years • The service sector makes up 54% of GDP.
led by Shri Nitinn Gadkari. and strategic location give it a prominent voice in international affairs. and its growing economic strength. secular.sovereign. Japan. the European Union. India will be a non-permanent member of the Security Council ▫ India's size.Government • • • • President . and scientific and technical capacity give it added weight ▫ India is now strengthening its political and commercial ties with the United States.Pratibha Patil Prime minister . democratic republic Political conditions ▫ Emerging as the nation's single largest party in the May 2009 Lok Sabha election. socialist. population. Congress currently leads a coalition UPA government under Prime Minister Manmohan Singh ▫ The Bharatiya Janata Party (BJP). holds the secondlargest number of seats in the Lok Sabha • Foreign relations ▫ Starting in 2011. ▫ India is an active member of the SAARC . Iran. military prowess.Manmohan Singh Type of state . China.
RISK • Strengths ▫ ▫ ▫ ▫ Diversified growth engines Solid fundamentals: high savings and investment rates Good private sector performance in industry and services Moderate foreign debt and large foreign currency reserves • Weaknesses ▫ Lack of infrastructure and weak education system ▫ Rise of wages for skilled labor susceptible of eroding the competitive advantage ▫ Increase of private corporate debt ▫ Fragile public finances ▫ Persistent uncertainty over the Kashmir question .
23 4. ONGC 2.10. CIL 2.242. TCS 2.corporations • Top 5 –industry-market capitalization(Rs cr) 1.366.11 126.96.36.199 2.136.37 5. Reliance Industries 2.79.15 .158.40.795. Infosys 1.
Indices • Corruption • Ease of doing business • HDI 87/178 122/181 0.54/0.94 .
512 (2010) 0.$6.9.1 CNY = 7.Communist state Currency .China • • • • • • • • • Capital .687 .Modern Standard Mandarin Type of government .821 km2 Population .640.Beijing Official language .83 INR (09/02/12) Area .655% GDP(nominal) .338.299.988 trillion HDI .0.1.Yuan (CNY) Conversion Rate .
5 billion $1.gov .Statistics Budget expenditure Budget revenue Debt External Import Export $1.664 trillion $1.5% 2.2 million 9.5% 816.8% Source – cia.897 trillion GDP growth rate Unemployment rate Labor force Industrial Production growth rate BPL Debt to GDP ratio 9.555 trillion $635.681 trillion $1.1% 6.
and budget deficits. behind the United States.Economy • China has reformed and opened its economy in 1978. China is the world's largest energy consumer and the world's secondlargest net importer of crude oil after the United States. China tried to combine central planning with market-oriented reforms to increase productivity. • China's demand for energy is surging rapidly. China overtook Japan to become the world’s secondlargest economy in terms of gross domestic product. • In 2010. • It has sustained average economic growth of over 9. • In the 1980s. . and technological quality without effecting inflation.3% since 1989. unemployment. living standards.
Government • President .Hu Jintao • Head of Government .Premier Wen Jiabao • Political conditions • Foreign relations ▫ In 1982. emphasized the rule of law ▫ Measures has been taken towards Human Rights Practices ▫ China has sought a higher profile in the UN through its permanent seat on the United Nations Security Council and other multilateral organizations. ▫ China has cultivated a more cooperative relationship with members of the ASEAN ▫ taken steps to improve relations with countries in South Asia. including India .
Risk Assessment • Strengths ▫ External accounts buoyed by industrial competitiveness and diversification ▫ Gradual move upmarket ▫ Infrastructure development spurred by the economic stimulus program ▫ Very high corporate savings rate that funds most investment ▫ China’s growing influence on the international scene ▫ Limited external indebtedness ▫ Sovereign risk under control with public sector debt largely domestic and denominated in renminbi ▫ Increasing social tensions associated with the growth of inequality ▫ Industrial and commercial overcapacity ▫ Weakness of Chinese banks considering the dynamism of credit and the uncertainties over the amount of non-performing loans ▫ Environmental problems • Weaknesses .
00 Sinopec-China Petroleum Energy $130.32 $147.23 $184.Corporations in Billions USD Name PetroChina ICBC China Construction Bank Bank of China Financial Services Industry Energy Financial Services Financial Services Financial Services Market Share $333.84 $242.06 .
0.94 .Indices • Corruption – 78/178 • Ease of doing business – 83/181 • HDI .687/ o.
8 to 0. Singapore and Thailand.6 % on 1 January 2010 pending implementation of the free trade area by the remaining ASEAN members. • The average tariff rate on Chinese goods sold in ASEAN countries decreased from 12.1 %. Malaysia.11 % of goods traded among them to zero.8 to 0. • This reduction took effect in China and the six original members of ASEAN: Brunei. to zero. . Indonesia. • The six original ASEAN members also reduced tariffs on 99. the average tariff rate on ASEAN goods sold in China decreased from 9. or 90% of imported goods. the Philippines.881 product categories. Meanwhile.ASEAN–China Free Trade Area • The free trade agreement reduced tariffs on 7.
and the benefits that may derive from the possible China-India Regional Trading Arrangement At present the trade between the 2 countries results in a trade deficit in China’s favour Negotiations are on for a Regional Trading Agreement on the lines of an FTA with China India has appealed for China to open up its market to Indian goods and companies India wants China to end restrictions on ▫ ▫ ▫ Information technology Bollywood films fresh food .Agreements with India • A Joint Study Group was constituted following Prime Minister’s visit to Beijing in 2003. • • • • • The JSG in its Report has recommended that the two governments appoint a Joint Task Force to study in detail the feasibility of. The JSG would also draw up a programme for the development of India-China trade and economic cooperation for the next five years. ▫ ▫ To examine the potential complementarities between the two countries in expanded trade and economic cooperation.
South Africa .
5.86.Constitutional Democracy • Currency .1.$422.Cape Town • Official language .Ranks 123rd .037 billion • H.05.IsiZulu .South Africa • Capital .Rand • Area .221.D.Afrikaans and South African English • Type of Government .I .757 • GDP .q km • Population .037 s.
68 billion $73.Statistics Budget expenditure Budget revenue Debt External Import Export $94.gov .64 billion GDP growth rate Unemployment rate Labor force Industrial Production growth rate BPL Debt to GDP ratio -1.02 billion $66.2% 47% Source – cia.8% 24% 17.57 billion $77.38 million -7.84 billion $66.
( gear ) • South Africa's budgetary reforms such as public finance management have been widely appreciated. • commitment to open markets privatization. • Active trade liberalisation .ECONOMY • South Africa has a two-tiered economy. and a favorable investment climate .
000.Financial policy • sophisticated financial structure • Large and active stock exchange • South African Reserve Bank (SARB) performs all central banking functions influencing interest rates and controlling liquidity through its interest rates on funds provided to private sector bank • Private citizens are now allowed a one-time investment of up to 2.000 rand (R) in offshore accounts .
fully an additional $5 billion (R35 billion) to GDP.Impact of the 2010 FIFA World Cup • The 2010 World Cup was the largest event ever to be held on the African continent. • In preparation. South Africa spent over $5 billion on building and improving stadiums and transportation systems.18 million fans had attended the 64 matches. • By the end of the competition on July 11.5% to South Africa’s 2010 GDP growth. the thirdhighest turnout in FIFA’s history • The World Cup was expected to add an additional 0. . over 3.
• The value-added processing of mineral is a major industry and an important growth area . is a significant producer of gold. and titanium. chrome.Trade and Investment • South Africa has rich mineral resource • It is the world's largest producer and exporter of platinum. vanadium. manganese. and also exports a significant amount of coal.
5% of the gross domestic product.7% in 2008 .0%. • The domestic telecommunications infrastructure provides modern and efficient service to urban areas.Cont… • Primary agriculture accounts for about 2. but at comparatively high costs and with limited coverage in rural areas • Annual GDP growth between 2004 and 2007 averaged 5. but fell to a rate of 3.
• The agreement was ratified in December 1999. and implementation began in September 2000. It provided duty-free treatment for 85% of trade in 2008 and aims for 100% by 2012. .Cont… • Exports amounted to 24% of GDP in 2010 • South Africa is a member of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC).
which was based on import substitution. anticompetitive behavior.Cont… • South Africa has made great progress in dismantling its old economic system. high tariffs and subsidies. and extensive government intervention in the economy. • The leadership has moved to reduce the government's role in the economy and to promote private sector investment and competition .
Government • Head Of State.President Jacob Gedleyihlekisa Zuma • Type of state-Multiparty Parliamentary Democracy .
. transforming South Africa's society to remove the legacy of apartheid will be a long-term process requiring the sustained commitment of the leaders and people of the nation's disparate groups. Nevertheless. Programs to improve the delivery of essential social services to the majority of the population are underway. Access to better opportunities in education and business is becoming more widespread.Political conditions South Africa's post-apartheid governments have made remarkable progress in consolidating the nation's peaceful transition to democracy.
and to use multilateral bodies to insure that developing countries' voices are heard on international issues. the Democratic Republic of the Congo. to promote the peaceful resolution of conflict in Africa. Sudan. Comoros. and Zimbabwe. South Africa has become a leading international actor.Foreign Relations Having emerged from the international isolation of the apartheid era. and cultural regeneration of Africa. . through the New Partnership for African Development (NEPAD). political. South Africa has played a key role in seeking an end to various conflicts and political crises on the African continent. Madagascar. Its principal foreign policy objective is to promote the economic. including in Burundi.
efficient tertiary sector (banks. platinum.Risk Assessment • • Strengths 33% of sub-Saharan African GDP Extensive natural resources (coal. coal. and so on) Diversified industry. diamonds. telecommunications) Public-sector finances and indebtedness under control Business environment among the most efficient in emerging countries Economic and political heavyweight on the continent Good foreign debt profile: essentially medium-long term and rand-denominated • • • • • .
• • • • • • • • Weaknesses Severe inequality. consequences of the apartheid education policy). the main obstacle to economic development Dependence on foreign capital inflows which are volatile in nature Outlying geographic location Sensitivity to raw material prices Sensitivity to economic conditions in Europe and United States and to Asian competition Deficient transport and energy infrastructure 11% AIDS prevalence rate . high unemployment and shortage of skilled manpower Human capital deficit (26% unemployment and 11% AIDS prevalence rates.
4 .08 27.TOP 5 Corporations NAME SASOL SECTOR ENERGY MARKET VALUE(IN BILLION DOLLARS) 23.MINES.67 15.ME TALS 22.85 STANDARD BANK GROUP MTN FIRST RAND IMPLA PLATINUM HOLDINGS FINANCIAL SERVICES MEDIA AND COMMUNICATION FINANCIAL SERVICES MINERALS.31 13.
A JAPAN GERMANY U.S.K CHINA OTHER 7% .TRADE STATISTICS SALES % 53% 12% 12% 9% 7% U.
I-123 (low) GMCI-22 of 26 (low) .INDICES • • • • Corruption Perception Index-54 of 178 Ease of doing business-32 out of 181 H.D.
Business Tip Breakfast is considered important for business meetings. .
Relatively stable political environments. Egypt. Turkey ▫ Much smaller than BRIC as in their formative years • Strengths ▫ ▫ ▫ ▫ ▫ Diverse economies. Fast growing population. Indonesia.CIVET. Relatively sophisticated financial systems Unhampered by high inflation or massive debt .The next emerging economies • The CIVET countries are ▫ Colombia. Vietnam.
Review • Colombia: ▫ History of drug wars. but a dynamic economy ▫ Key industries. ▫ But political stability is less certain • Vietnam: ▫ A low-cost alternative to China for manufacturing. • Indonesia: ▫ The largest of the CIVET ▫ Huge population. oil and coffee. . ▫ Communist government. ▫ A small market. include fresh flowers.
Cont… • Egypt: ▫ Well-educated. prosperous population in cities. and could face religious turmoil. • Turkey: ▫ Relative stability ▫ Good ties with the West ▫ However not for manufacturing as costs are high . ▫ High level of debt ▫ The political future is cloudy.
Business opportunities in Emerging markets • Export opportunities ▫ Exponential growth ▫ Population hungry for new products and services • Find a local partner .
Power generation to meet an explosive demand for energy 9. Environmental technologies 8. gas and mining sectors) 10. ports. Infrastructure (roads. International marketing book . Telecommunications 4.Business opportunities in Emerging markets • Top export niches include: 1. urban transport and airports) 2. Measuring instruments. and machinery and equipment (particularly for the oil. Transport sector (including seaways and cars) 3. Agribusiness 7. Business management systems 6. Consumption pattern 11. railways. Health-related products 5.
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