However, the continued weakness in oil prices has brought the differences between the BRIC economies into sharp relief, bolstering the view that the acronym was based more on marketing than economics.
“BRIC is a very convenient acronym,” said Gavin Haynes, managing director at Whitechurch Securities.
“They are the four largest powerhouses in the emerging market, but the performance disparity that we continue to see illustrates that they have very different dynamics. The only correlation was during the emerging markets boom, when they were the four fastest-growing economies.”
That gap has become even more pronounced since the oil price collapse, with energy consumers India and China currently topping most managers’ lists of viable investments, while Brazil and Russia languish in the arena of the unloved.
A Goldman Sachs study conducted in 2007 forecasted Chinese and Indian GDP to hit $71tn and $38tn respectively by 2050, against Brazil and Russia’s relatively measly $11tn and $9tn.
However, eight years is a long time in finance – is India still likely to grow 4043% in a 44-year time-frame?
“India has the potential,” Haynes explained. “It now has more centralised control, a cheap labour force and a very young population. A lot of the factors are in place for quick growth, but it has been held back by the former lack of central control and the stifling bureaucracy.
“The key driver [of recent growth] is Modi’s reforms, but there still needs to be evidence that they will actually have a material effect on the Indian economy and whether that growth is sustainable.”
Investors are divided into those who believe that Indian growth is sustainable enough as it is, and those – like Haynes – who are sceptical because of the characteristics of the Indian market, regardless of whether the changes materialise
“The problem is that there is no dividend culture,” said Haynes. “It is all centred on share price and growth. We could see corporate culture become more shareholder-friendly in the future, but until then it is not great for dividends.”
China is also moving through a reform process – though, contrary to India, there appears to be wider optimism for its long-term economic prospects following a decade of ostensibly unsustainable growth.
“[China’s] short-term policy has often been more focused on stabilising growth,” explained Michael Hugman, emerging market strategist at Investec Asset Management. “But now, a set of longer-term objectives appears to be taking precedence.
“Over the course of recent months, economic data and policy announcements in China have raised our conviction that the government is committed to moving ahead with a rebalancing of the economic growth model, whilst seeking to manage the resulting slowdown in headline GDP growth.”
Hugman outlined China’s current account surplus, better control of government debt and a rise in real interest rates as key to the market’s development.
Likewise, Anna Stupnytska, global economist at Fidelity Worldwide Investment, believes that sceptics would do well to not give too much credence to the headline figures, which showed Q1 GDP growth had dropped 0.3% to 7% since the previous quarter.
“While China’s numbers were softer than expected, there is no point in obsessing over the quantity of growth,” she said. “It is much more important to focus on the quality.
“China’s rebalancing is well under way. The ratio of real retail sales growth to industrial production growth is at all-time highs, excluding the period around the financial crisis. Of course, there is still more to be done, but it’s hard to argue the process has not been impressive so far.”
At the other end of BRIC spectrum, Russia and Brazil find themselves on the wrong side of the commodities price drop, with geopolitical issues and corporate scandals adding to their energy-based woes.
However, despite the currency troubles, issues with the EU and greatly-diminished energy income, Haynes identified one area of the Russian market where investors can find a modicum of good news.
