BRICs offer opportunities home and abroad

THE rise of the BRIC economies are of growing importance to the global economy. Mike Redfern, partner at Grant Thornton, assesses the key points for Yorkshire businesses.

WHILST mature economies across the globe grapple with towering budget deficits, anaemic growth and rising unemployment, the BRIC economies (Brazil, Russia, India and China) are expanding rapidly, lifting people out of poverty and driving the global economy.

The manner in which leaders in the troubled eurozone recently pleaded with these markets for funds to help alleviate the sovereign debt crisis marks yet another definitive step in the transition of economic power from ‘west’ to ‘east’.

Indeed, it has been suggested that the term ‘emerging markets’ is no longer appropriate, but rather the BRICs should be grouped alongside Indonesia, Mexico, South Korea and Turkey as ‘growth markets’. What’s more this month, Brazil became the world’s sixth biggest economy having overtaken the UK.

Of course, when measured on a per capita basis, the GDP of these economies still lags behind that of the G7.

However, on an absolute basis, they are catching up fast. The BRICs are forecast to account for 37% of global growth in the period 2011 to 2016, with China alone contributing 22%.

Yorkshire is in a great position to take advantage of these opportunities in the BRIC regions. As well as capitalising on the knowledge and experience in the manufacturing sector and its valuable intellectual

property, there is also huge potential to export our region’s products. 

For example, Indians tend to love British produce and businesses which can offer iconic British products have a major advantage, for example Paver Shoes in York has been able to capitalise on this demand. 

We also have the biggest financial services sector outside London and have the experience to support regions such as South America – Brazil alone needs over US$300bn of investment to achieve 5% growth over the next year. 

Our local businesses can help with private equity, public private partnership expertise and capital. 

The opportunity is there for Yorkshire businesses – the starting point is to understand these territories and the challenges facing them. 

Once you’ve done your homework, be brave – get informed professional advice to support your expansion and go for it.

Key findings from the latest Grant Thornton International Business Report, which gives a quarterly survey of business leaders, covering 11,500 businesses in 40 economies, included:

– Business leaders in the BRIC economies remain more optimistic about the outlook for their respective economies compared with peers in mature markets.

– Business confidence in the BRIC economies extends to their expectations for boosting business performance over the next 12 months. Net 72% of BRIC businesses leaders expect revenues to rise in 2012, compared with 37% in the G7 and 43% globally.

– Employment prospects in the BRIC economies remain robust; net 45% of businesses increased staff levels in 2011 (compared with just 22% in the G7) and a further 41% expect to do so again in 2012.

– The majority of business leaders for the BRIC economies are concerned about the impact of inflation with 68% citing it as a concern across all four countries although this ranges from 94% in India to 58% in China.

– Investment activity in the BRIC economies looks robust; net 47% expect to increase investment in plant and machinery in 2012 (net 31% across the G7).

To find out more about trading with BRIC territories, consult Grant Thornton’s team of international business advisers on (0113) 245 5514.