Market Research Report
Analysis of Key Sectors of BRICS Countries: Agriculture, Banking & Finance, Dairy, Meat, E-Commerce, FMCG, Healthcare, ICT, Manufacturing, Mining, Trade & Logistics, Tourism and Water & Sanitation (2017 - 2022)
|Published by||Mordor Intelligence LLP||Product code||392408|
|Published||Content info||139 Pages
Delivery time: 1-2 business days
|Analysis of Key Sectors of BRICS Countries: Agriculture, Banking & Finance, Dairy, Meat, E-Commerce, FMCG, Healthcare, ICT, Manufacturing, Mining, Trade & Logistics, Tourism and Water & Sanitation (2017 - 2022)|
|Published: February 12, 2017||Content info: 139 Pages||
With their growing economies, rising incomes with young and expanding population, the five emerging markets of Brazil, Russia, India, China and South Africa offer a wealth of opportunities for companies to expand/enter the region. Increasing demand plays a major role in the development of these economies. Nevertheless, these countries have different advantages and drawbacks.
The five emerging markets of Brazil, Russia, India, China and South Africa are tipped to provide some of the most exciting growth opportunities in various industry sectors. All five economies performed well over the review period. Growth opportunities and prospects are good in these countries. Although their economies are very different in size, growth and investment opportunities with China GDP being more than 4 times that of the Brazil in 2014, all offer promising long-term potential for investors.
Rising demographics coupled with increasing youth population is a driver for all these countries. The five markets have large populations, ranging from 1367.8 million in China to 54 million in South Africa. Most of this population is either semi-skilled or skilled, with South Africa increasing at the highest rate of 7.44% till 2020. Compared to developed markets, regular household sizes are large in all of these countries. But this is gradually changing due to urbanization, increasing number of single home families, working women and late marriages.
Changing behaviors and general outlook, rise in disposable income is shaping the future of these markets. In 2013, South Africa recorded the highest per capita income among all the five countries at US $ 5916, while India being the lowest with average per capita income of US $ 1165 because of its population (huge).
All five countries have suffered for several years from a mixture of ethnic tensions, anti-government protests and national insurgencies. Poverty and Income difference are prevalent, making a huge wealth gap between rich and poor. However, a new middle class is growing, due to social reforms and wealth created by economic growth trickling down to reach more customers.
When the global economic crisis hit in the 2008-09, having no more than a moderate impact on the Brazilian economy, erstwhile President Luiz Inacio Lula da Silva of Worker's Party having won the Presidential election in his 3rd attempt felt inclined to alienate himself from free trade and an open market associated with globalization. In 2010, in the face of increased state spending, the GDP reached the next highest of about 9.3% in the first quarter of 2010. In 2011, under the determined leadership of Dilma Rousseff assumed office, the Brazilian government's will to protect against cons of globalization morphed into a preference for the Capitalism model of growth. This developmentalism form of government increased inflation while prices of key utilities affecting the inflation index, like food, oil, and electricity were capped. Moreover, tax breaks for preferred sectors were granted, while the Petrobras scandal involving politicians and well over US$2 billion in siphoned money raged on.
Brazil is the 6th most populated country in the world. Its consumer market is set to overtake that of France and UK by 2020, becoming the 5th largest in the world. Its middle class is 100 million strong and rising, with a GDP per capita increasing from the current US$11,208. The dismal income inequality gap has been steadily closing. In view of the recent fiscal tightening measures, a short term slump can only be followed by prosperity in the long term.
Russia, a country riddled with a troubled past, a recent catapult to prosperity, is indisputably a land of opportunities. The leading country in Emerging Europe, Russia is no stranger to international politics affecting its economy. Indeed, the recent annexation of Crimea, a part of Ukraine by Russia has resulted in disgruntled sentiments across the globe, most particularly in the West.
The fall in Ruble registered after the Ukraine crisis has increased cost of imports, inflation, interest rates, recession and joblessness, and an overall slump in the economy. The Russian Trading System, calculated in terms of the US dollars suffered a drop of about 4%. Even with the MICEX having risen by about 2% in this time, investors remain wary and trade continues to be sparse. The current Ruble value of about ? 50 against US$1 is a stark comparison with the average of ? 32 at the start of 2014, registering an average devaluation of about 40% since 2014.
Exacerbating the situation is the drop in price of oil. The Russian economy's dependence on oil can only be called precarious. Russia has about 87 billion barrels of oil, and about 1163trillion cubic feet of natural gas reserves. Making up about 70% of all export value, and contributing about 30% to the country's federal budget and a quarter of the GDP, oil's contribution to Russia's GDP is projected to further increase to 50% in the coming decades.
It is the increase in global prices of oil that drove the growth of Russian economy between 2000 and 2010, catapulting it to the foremost position in the list of Emerging European countries. The drop of price of oil from US$110 a barrel to about $60 a barrel has resulted in an increase in demand with a simultaneous decrease in investment for new production, leaving the Russian economy vulnerable.
India among BRICS countries is the fastest growing country, with most promising opportunities and growth. India is expected to grow with a GDP growth rate of 7.5%, which is also highest in the world. India has emerged as one of the most attractive destination for investment and for doing business in the recent years. As the fastest growing economy in the world, which has not only sustained the global downturn of 2008-09, India is slated to grow at consistently higher rates during next few decades.
India has a large sized middle class which is growing, offering a large domestic market for foreign products and services. If India continues its recent growth trend, average household income will nearly triple over the next two (2) decades and it is expected to become the world's 5th largest consumer economy by 2025, according to a McKinsey report in 2010. The consistent economic growth in India has been an important factor that has contributed towards the decline in poverty.
China is the most populous country in the world, home of 1.33 trillion people. China is a big potential market for manufacturing, because of its Rare Earth Metal reserves. About 90% of World's rare earth metal reserves are in China, which gives them a competitive edge over others. China is a young nation with lots of potential but steadily growing old because of its one child policy. Low cost labour and easy labour availability is helping all the sectors in the country to grow. China is the biggest exporter worldwide,
China GDP is growing at a high growth rate of 7% in 2015. Current account surplus is giving a boom to the economy and currency. China became a favorable nation for trade market and biggest exporter of goods in the world. Low Debt to GDP ratio and low inflation is helping its economy to grow above world's average. In 2012, manufacturing sectors accounted for 31% of the total export. USA is the biggest export destination of China with a share of 19% of China's exports.
The developing country of the sub Saharan region, South Africa is ranked as an upper middle income country by the World Bank; with the top 10% population accounting for 58% of the country's income. Services accounted for the largest sector of the economy with 73% of GDP, followed by Manufacturing and Agriculture accounting for 13.9% and 2.6% of the GDP respectively. As of 2013, the Gross Domestic product has been recorded as US$ 351 billion. While South Africa saw strong growth rates of 4.5% (average) during 2002-2008, the recession of 2008 exposed the structural problems of high Gini coefficient, low skilled labour force, unemployment, poor infrastructure, high crime and corruption rates; thus giving a major blow to the growth rate by declining to negative. With major reforms, government policies, and strong financial system the country has recorded 4.1% growth as of 2014. Key economic factors which seem to challenge the economy are high unemployment rates of 24.3%, labour disputes, high current account deficits of 5.4% of GDP, retail inflation, volatile gold and oil prices, and downgrading by rating agencies. The three major provinces of Gauteng, Kwazulu-Natal and Western Cape collectively contribute more than 60% to the country's value.
South Africa with its ease of doing business rank of 43 in 2015, has diversified in to several sectors of manufacturing and services from being an agrarian economy. The highest growth industries are textiles, food processing, mining, automobiles, chemicals & fertilizers, machinery, and communications. The retail and financial services industry of South Africa are the most sophisticated on the continent with an effective regional presence. Majority of the reserves come from the diamonds, gold, titanium, platinum, manganese and mining greatly contributing to GDP. The coal mining industry provides 95% of coal reserves to meet its energy needs. South Africa provides nearly 50% of electricity to the entire continent. With nearly 30 million South African using mobile phones and internet penetration to be 29% (world average: 41%) the ICT industry is seeing a major growth trajectory. The South African dairy industry which operates on free market principle produces 2.4 billion litres per year and employs nearly 60000 people.
The economy largely depends on foreign trade and China, USA and Germany are seen as South Africa's biggest trade partners. The main imports to the country are processed foods, chemicals, original equipment components, oil and energy. The automotive production development plan aims to boost local production XX.XX million vehicles by 2020 by encouraging the use of local components.
Infrastructure will drive BRICS growth, including transport (road, rail and ports overhaul) and energy infrastructure, construction driven by the upcoming Olympics in Brazil. An expanding middle class in all countries, with the disposable incomes rise of 14% to 32% will fuel a rising retail sector, especially in the Franchising area.
Other key factors in the growth of BRICS nations are high population, young workforce and cheap labour, high purchasing power parity, high economic growth (except brazil), availability of resources, growth in transportation sector, un-matured and untapped markets in most of the countries. Strong banking system and strong fundamentals helped BRICS countries to grow in 2008-09 recession.
Recent Sanctions and Tension on Russian soil is holding its growth rate. Brazil GDP growth rate is negative because of high inflation and interest rates. Low Credit rating is also creating troubles for Brazilian economy. Labour unrest, increasing household debt, low investments in infrastructure, unemployment, skill shortage in manufacturing and poor performing education system seem to threaten the South African economy. High competition and low manufacturing production are creating trouble for Indian Market whereas in China, Political unrest, Corruption & Localized Unrest, Human Rights and Religious Freedom, Environmental Issues and China's Legal Reform are the biggest challenges which China is facing now a days.
What the report offers
The study identifies the situation of BRICS, and predicts the growth of the countries. Report talks about Agriculture, Banking & Finance, Dairy, Meat, E-Commerce, FMCG, Healthcare, ICT, Manufacturing, Mining, Trade & Logistics, Tourism and Water & Sanitation Market with production, consumption, import & export data, government regulations, growth forecast, major companies, upcoming companies & projects, etc. Report will talk about Brazil Economic conditions and future forecast of its current economic crisis, reasons and implications on its growth. The study clarifies that, currently, the BRICS growth is high as compared to the world and it is set to be surpass all the World Economies by 2020, which is expected to grow at an average GDP growth rate of 6.9% from 2014 to 2020. Lastly, the report is divided by major import & export and importing and exporting partners.