The BRIICKs nations will lead the global growth by 2025

By 2025, global economic growth will predominantly be generated in emerging economies. Countries like China, India, Brazil, Russia, Indonesia and South Korea (The BRIICKs) will account for more than half of all global growth and the international monetary system is less likely to be dominated by an single currency by 2025. The WB report, Global Development Horizons 2011 - Multipolarity: The New Global Economy, projects that as a group of emerging economies will grow on average by 4.7% a year between 2011 and 2025. Advanced economies, meanwhile, are forecast to grow by 2.3% over the same period, yet will remain prominent in the global economy, with the euro area, Japan, the United Kingdom, and the United States all playing a core role in fueling global growth.

“The fast rise of emerging economies has driven a shift whereby the centers of economic growth are distributed across developed and developing economies - it’s a truly multi-polar world,” said Justin Yifu Lin, the World Bank’s chief economist and senior vice president for development economics. 

The WB report highlights the diversity of potential emerging economy growth poles, some of which have relied heavily on exports, such as China and Korea, and others that put more weight on domestic consumption, such as Brazil and India.

With the emergence of a large middle class in developing countries and demographic transitions underway in several major East Asian economies, stronger consumption trends are likely to prevail, which in turn can serve as a source of sustained global growth.

The shift in economic and financial power in the direction of the developing world has important implications on corporate financing, investment, and the nature of cross-border merger and acquisition (M&A) deals.

As more deals originate in emerging markets, South-South FDI is likely to rise, with most of it going into green-field investments, while South-North FDI is more likely to target acquisitions. As they expand, more developing countries and their firms will be able to access international bond and equity markets at better terms to finance overseas investments.

To maintain growth and manage with more complex risks, economies that are home to emerging growth poles need to reform their domestic institutions, including in the economic, financial, and social sectors. Economies like China, Indonesia, India, and Russia all face institutional and governance challenges.

Human capital and ensuring access to education is a concern in some potential growth poles, particularly Brazil, India, and Indonesia.