Seeking Growth: BRIC and Beyond

Goldman Sachs Asset Management (GSAM) has adopted the term “Growth Markets” to describe how we view some of the world’s most dynamic economies.

Given the rising importance of some of these economies, we think the traditional developed/emerging country divide no longer reflects the fundamental nature of the global economy today.

As a result, countries from the traditional emerging markets universe with at least 1% of global GDP are distinguished and called “Growth Markets.” Eight countries currently satisfy this criterion: each of the BRIC countries (Brazil, Russia, India and China), as well as the four largest “Next 11” (N-11) countries: Mexico, Korea, Turkey and Indonesia.

These economies are most likely to experience rising productivity coupled with favorable demographics and, therefore, a faster growth rate than the world average going forward. Other countries could achieve Growth Market status over time—these include some of the other N-11 countries, namely Nigeria and the Philippines, and possibly Egypt. For now, however, they remain in the Emerging Markets group.

Our Views on the world's fastest growing economies

>> Video: Redefining Emerging Markets. Introducing Growth Markets

>> Video: The Next 11: It's Time to Redefine Emerging Markets

>> Read: Jim O'Neil's latest Viewpoints from the office of the Chairman

^{¹In 2001, Jim O’Neill was Chairman of the Goldman Sachs Economics Research Group. In 2010, he joined the Investment Management Division as Chairman of GSAM.}^{²The BRIC countries are Brazil, Russia, India and China.}

Political and economic structures in countries with emerging economies or stock markets may be undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristics of more developed countries including a significant risk of currency value fluctuation. Such instability may result from, among other things, authoritarian governments, or military involvement in political and economic decision-making, including changes or attempted changes in governments through extra-constitutional means; popular unrest associated with demands for improved political, economic or social conditions; internal insurgencies; hostile relations with neighboring countries; and ethnic, religious and racial disaffections or conflict. Certain countries may have in the past failed to recognize private property rights and have at times nationalized or expropriated the assets of private companies. As a result, the risks from investing in those countries, including the risks of nationalization or expropriation of assets, may be heightened. In addition, unanticipated political or social developments may affect the values of investments in those countries and the availability of investments in those countries. The small size and inexperience of the securities markets in certain countries and the limited volume of trading in securities may make investments illiquid and more volatile than investments in more established markets. There may be little financial or accounting information available with respect to local issuers, and it may be difficult as a result to assess the value or prospects of an investment. In addition, the settlement systems may be less developed than in more established markets, which could impede ability to effect transactions and may result in investments being settled through a more limited range of counter parties with an accompanying enhanced credit risk. Certain countries may also operate margining or pre-payment systems whereby margin or the entire settlement proceeds for a transaction need to be posted prior to the settlement date which can give rise to credit and operational risks as well as potentially borrowing costs. In certain markets, local regulations may limit investment into local securities to certain qualifying foreign institutions and investors through licensing requirements and may also limit investment through quotas granted by local authorities.

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. Please see additional disclosures.

This material has been prepared by GSAM and is not a product of the Goldman Sachs Global Investment Research Division. The views and opinions expressed may differ from those of the Global Investment Research Division or other departments or divisions of Goldman Sachs and its affiliates. Investors are urged to consult with their financial advisors before buying or selling any securities. This information may not be current and GSAM has no obligation to provide any updates or changes.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by GSAM to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice.

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