Goldman Sachs, BRICS is dead, long live BRICS?

Goldman Sachs (GS) which created the acronym BRICS to designate the world’s five most important emerging economies, namely in order Brazil, Russia, India, China and South Africa thinks that it’s no longer valid after it ditched its dedicated fund which lost 88% of its value since a top in 2010.

The OECD warned a second time this quarter that the emerging markets’ slowdown, notably the BRICS especially China, will impact global economic growth. Brazil is about to experience its worst recession for 85 years and its economic growth should be negative in 2016. Shaken a little by western sanctions over the conflict in Ukraine and more seriously by the drop in oil prices since summer 2014, Russia will lose 2.7% in economic growth in 2015 but should get back on a positive track as soon as 2016.

China is adapting to a “new normal” while recording its weakest economic growth since the 1990s, not to mention that official figures were challenged by analysts lately. South Africa lost its rank as Africa’s largest economy to Nigeria and perspectives are dull. Thanks to the Chinese slowdown, India seems to take advantage of the situation, yet this could be short-lived if global growth stagnates or downslides.

The long road towards the status of advanced economy is strewn with pitfalls. Today’s difficulties are all tomorrow’s strong foundations if sanely addressed. BRICS have principally lost geopolitical relevance. These are mainly the sustainability and the quality of the China-Russia relationship over time which could decide BRICS’ fate as homogeneous actor of global economy.