The Brics economies could emerge as key driver of growth in 2025, according to leading Swiss bank.
The Brics nations – Brazil, Russia, India, China and South Africa – are stepping back into the spotlight as pivotal players in the global growth narrative, according to EFG International, a Swiss private bank.
“Size matters,” says Romain Pasche, global head of investment content and delivery at EFG in Geneva. The Bric acronym was coined by Goldman Sachs’ economist Jim O’Neill in 2001. Twenty years later in 2021, Mr O’Neill expressed disappointment at the poor progress of his chosen emerging economies, which started a formal grouping in 2009. South Africa joined in 2010.
But Mr Pasche believes the emerging market bloc, home to 45 per cent of the world’s population and responsible for 37 per cent of global GDP, is poised to outpace advanced economies in shaping the next phase of economic expansion.
“Owing to Brics’ superior growth rate, this gap is expected to increase in the foreseeable future,” he adds.
It is not just the sheer size of their economies or populations that underscores their potential; “growth matters”, according to Mr Pasche. “Key Brics nations grow at an above global average rate,” he says.
According to the IMF, while the US is expected to grow at 2.2 per cent in 2025 and the eurozone at 1.2 per cent, the largest Brics nations like China and India are expected to grow at 4.5 per cent and 6.5 per cent, respectively, this year. “Even a slower growing large Brics nation like Brazil is still expected to match the US at a 2.2 per cent expected growth rate,” he says.
“Investors’ minds are increasingly focused on Brics nations as exemplified by Google search trends which, in the final quarter of 2024, have reached a record level,” states Mr Pasche. Brics-related searches were significantly more frequent in this period than key macroeconomic topics like inflation, recession, or the US dollar, he says.
A key factor bolstering investor confidence in Brics is their prudent fiscal management, which contrasts sharply with debt burdens of advanced economies. EFG believes “high levels of government debt and deficits will remain a key concern for investors” this year and as a consequence, country-specific fiscal deficits will take centre stage.
“In this respect, Brics nations are well positioned as they all exhibit a well-controlled debt/GDP ratio below 100 per cent,” says Mr Pasche. China has a debt/GDP ratio of 89 per cent, India posted 82 per cent, and Brazil 87 per cent.
In comparison, six out of the seven G7 nations exhibit debt/GDP ratios far above 100 per cent, notably the US at 123 per cent, France at 112 per cent, Italy at 139 per cent and Japan as high as 255 per cent.
Emerging drivers
Yet, beneath the surface of their collective promise lies a persistent tension: is the Brics a cohesive bloc or merely a convenient grouping of disparate nations?
One can compare the contrasting paths of India and China. On the one hand, India leans into its democratic structure and positions itself as a counterweight to China in geopolitics.
On the other hand, China’s state-led growth model and assertive global strategy often diverge from the interests of its peers. So can this group serve as a driver of global growth?
“The bottom-line answer to all the underlying issues is, in short, ‘no.’ But some of the individual economies within the Brics can,” says Arnab Das, global macro strategist at Invesco.
“Actually China, which has already been doing so one way or the other; probably India, if it keeps its own growth rate reasonably steady and high; ideally Brazil, if only it gets its act together. And conceivably even Russia; but it remains to be reopened even as a question mark,” he explains.
China is already a major driver of global growth but faces challenges including protectionism, security concerns, and potential trade tensions, according to Mr Das.
Growth potential remains in Brazil despite some challenges. “Brazil, as the old quip goes, is the country of the future — and always will be,” he says
“Brazil can break out of the loop of being caught in its past instead of growing into its potential, but for now, it’s still caught up in domestic fiscal and associated political challenges, owing to a low productivity, middle-income country with a European-sized welfare state and tax burden,” he explains.
Mr Das quotes Mario Henrique, who founded the Brazilian investment bank, Bozano Simonsen, and was a finance minister: “Power in Brazil is like a violin — to be picked up with the left hand but played with the right.”
In Europe, Russia’s future remains uncertain due to its ongoing military aggression against Ukraine and Moscow’s continued illegal occupation of several east Ukrainian provinces.
Some commentators argue that the Brics grouping has its roots in the RIC trilateral forum — comprising Russia, India, and China — established well before Mr O’Neill coined the term. Its primary objective was to challenge the dominance of a unipolar world order, heavily concentrated around the US.
“Clearly the rise of China has contributed to this original goal,” says Mr Das. China is giving the US “more than a run for its money in many” areas of tech, military prowess and naval power. Beijing is also involved in “economic theft”, believes Mr Das, as it has replaced the US as dominant direct trading partner for most countries outside North America and the North Atlantic.
“In my view, the best way to think about the Brics is to consider them on their individual merits and demerits rather than as part of one of those acronyms and groupings,” he says. “Buying or selling the Brics, then, is tantamount to buying or selling the market.”
In other words, according to both Invesco and EFG, investing in Brics offers a broad, largely passive exposure to a significant segment of emerging markets. However, given the bloc's diverse makeup of commodity importers and exporters, surplus and deficit economies, and regions marked by geopolitical risks and opportunities, it lacks the precision of a defined strategy.
A more selective approach, focusing on individual countries, may yield better results than treating the bloc as a homogenous investment basket, believes Mr Das.
