Looking for growth? Then look beyond the Brics, says Grant Thornton

Where are the best prospects among emerging nations? Not in the Brics countries, according to data on business optimism in 44 developed and emerging markets collated by Grant Thornton International, a network of business advisory firms. For the first time since it began collecting the data a decade ago, none of the Brics is among its top five countries.

Top of Grant Thornton’s optimism ranking is Peru, followed by the Philippines, the United Arab Emirates, Mexico and Chile. India, the highest of the Brics in the ranking, is in 6th place. Russia is in 11th, South Africa in 12th, Brazil 14th and mainland China in 23rd place.

“For all these emerging economies, it’s about how they make themselves attractive,” says Vishesh Chandiok, managing partner at Grant Thornton in India, who notes that business prospects have improved among smaller economies than the usual Brics juggernauts.

Small economies, he says, cannot compete with the likes of India and China in terms of domestic demand; but “there’s an opportunity for them to learn from the regulatory constraints China and India are perceived to have faced in terms of bureaucracy and red tape.”

In India, Chandiok says, the perceived constraint of poor infrastructure could turn into an opportunity as the government and private sector pump in more investment. India aims to invest $1tn in infrastructure during its 12th Five-Year Plan (2012-2017) and is looking for more private sector funding through public-private partnerships.

India remains “an enormous service economy, with huge pent up demand,” says Chandiok. “Any consumption-oriented business can reap the benefits in the long term,” he reckons. Companies such as GE and McDonalds have used their Indian operations as a hub for operations in the Middle East, Africa and the Far East, he says.

Still, India’s fall from the top five “shows the slow down in growth is real and being felt by businesses,” he says. “Fundamentals for success remain; there is some short-term pain, but long-term gain remains on the horizon.”

India’s forthcoming election, he says, could prompt progress on a proposed unified goods and services tax that would bring all indirect taxes in the country together into a common tax regime, greatly simplifying the business environment. It could also help deliver a companies bill that has been on the anvil for five yeas. But a change in government could also mean a return to the drawing board.

A lack of investment in infrastructure is increasingly seen as the major constraint on growth in the Brics countries, Grant Thornton found. It said 45 per cent of Brics businesses cited transport infrastructure as a constraint, up from 21 per cent last year and way above the 12 per cent global average. In Russia, the figure is particularly high, at 74 per cent; in India, it is 59 per cent.

If the Brics fail to address those constraints, says Grant Thornton, the smaller emerging and frontier economies are ready to take up the baton.

Maclovia Perez
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Fundadora,Coordinadora Red de Peruanos en Utah*USA*
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Corresponsal Red Democratica del Peru
(1998-2011..)
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Por una política exterior democrática en el Perú