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  released by Goldman Sachs also highlights certain interesting facts in this regard.

Growth and Trade: Between 2000 and 2005, the BRICs contributed roughly 28% of global growth in US dollar terms and 55% in purchasing power parity (PPP) terms. Their share of global trade continues to climb at a rapid rate. Trade amongst the BRIC nations has also accelerated, with intra-BRICs trade now nearly 8% of their total trade compared to 5% in 2000. The BRIC’s share of oil demand is moving steadily higher, with an estimated 18% share in the current year.

Capital Flows: The BRICs have played an important part in global financial developments. Latest estimates suggest that the BRICs now hold more than 30% of world reserves. While China is the dominant holder, Russia, India and Brazil have also accumulated sizeable proportions. BRICs’ current accounts continue to be in surplus, refiecting the group’s key role in the global savings supply. With China’s surplus increasing sharply, the BRICs’ current account is estimated at around US$ 240 bn in 2005 (close to 6% of BRICs’ GDP). Further, the BRICs’ share as a destination for global FDI also continues to rise (now 15% of the global total, nearly three times higher than in 2000).

India’s positioning

According to 2007 report on BRIC nations by Goldman Sachs, India is positioned fifth amongst the fastest growing nations in the world by 2025, based on the countries’ real GDP. The same is founded on extrapolations based on changing demographics, per capita income and contribution to world trade.
  Also, 25 years hence i.e. by 2050, while China is expected to replace USA as the world’s largest economy, India will not be lagging far behind in the third position.

BRIC Nations impacting Global Economy

The BRIC’s study specifically focuses on large countries, not necessarily the wealthiest or the most productive ones. According to estimates provided by the USDA, the wealthiest regions outside of the G-6 in 2015 will be Hong Kong, South Korea and Singapore. Combined with China and India, these five economies are likely to be the world’s five most infiuential economies outside of the G-6. In terms of the List of countries by GDP (nominal) per capita in 2007, Brazil ranks 64th, Russia 54th, China 105th and India 131st. By comparison, South Korea currently ranks 34th, Singapore 21st, and Hong Kong 27th. BRICs’ stock markets have got gradually re-rated since 2003, with Brazilian, Russian and Indian indices all up by around 150% over that period. The BRICs’ market capitalization is currently close to 4% of the global total. The BRICs’ share of world growth could rise from roughly 20 per cent in 2003 to more than 40 per cent in 2025. Their weight in the world economy could rise from less than 10 per cent now to more than 20 per cent in 20 years’ time. The BRICs impact on global markets is likely to follow a sequence. Commodity markets are already the clearest pressure point for BRICs growth and their impact on those markets is likely to be at its peak in the next decade. The BRICs could continue to increase their already substantial contribution to global oil demand growth. China’s contribution should remain high but is likely to peak in 5-10 years time and should decline steadily thereafter. India’s impact will become gradually more important. In less than 15 years, India’s contribution to global demand growth could overtake China’s. China’s share of actual oil demand may rise from 8-9 per cent currently to a peak of around 16.5 per cent in 25 years time, while India’s share could nearly double and will gradually converge on China’s.

With regard to the BRICs and global capital markets, the report predicts that the BRICs’ importance to global equity markets would rise from a paltry 3.5 per cent currently to around 10 per cent by 2020, depending on the extent of capital market development. Further, market capitalization in the BRICs economies could increase over the next decade by a factor of four times to $4 trillion, with a large increase in capital market activity. China and India alone could account for 60 per cent of that total. The forecast for 2007, was that the US economy would grow by about 2 percent during 2007, and that both France and the UK were projected to grow slightly more than 2006, but that the overall Group of 7 (G-7) economies would grow by 2.1 percent, compared with 2.8 percent in 2006. By contrast, the projections for the BRIC economies were staggering — an average of 8.9 percent for 2007 compared with 8.5 percent in 2.6, but with wide BRIC growth variations.

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