Domestic demand key driver
Domestic demand is still the largest contributor to real GDP (gross domestic product) growth in most of the BRIC and N-11 countries, according to a research.
In China both domestic demand and net exports have made positive contributions to growth this decade. In the other three BRICs (Brazil, Russia, India and China), net exports have detracted from growth, particularly in Russia and Brazil.
The contribution from domestic demand slowed in 2008 from the 2007 highs, but was still the main driver in all countries, US investment bank Goldman Sachs says in a report styled "Long-Term Outlook for the BRICs and N-11 Post Crisis".
Across the N-11 (Next Eleven), domestic demand has also consistently driven growth in many economies -- Indonesia, Iran, Mexico, the Philippines and Vietnam stand out in particular. At the other end of the spectrum, Korea and Turkey have grown largely on the back of net exports, particularly in 2008.
The countries that constitute N-11 as dubbed by Goldman Sachs are Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam.
Comparison with the developed world illustrates the striking difference, particularly versus the BRICs, says the research report released on December 4.
The contribution of domestic demand to growth in the US had slowed since 2004 and turned negative in 2008. Domestic demand in Euroland also fell significantly as growth slowed, with the contribution from positive net exports having virtually disappeared by 2008.
The relative importance of the BRICs and G7 for the global economic landscape has changed at a rapid and dramatic pace, particularly in terms of growth. Between 2000 and 2008, the BRICs contributed almost 30 percent to global growth in US dollar terms, compared with around 16 percent in the previous decade, according to the research findings, the report says.
"At the same time, the G7's contribution has fallen from over 70 percent in the 1990s to just 40 percent on average during the current decade. And although the advanced economies together still contribute more than the BRICs on this 2000-2008 average measure, since 2007 alone China has contributed more than any of them, including Euroland."
Since the start of the global economic crisis in 2007, the BRICs' contribution has risen even more: some 45 percent of global growth has come from the BRICs, up from 24 percent in the first six years of the decade. The N-11 contribution has risen by a modest 1 percent in the last two years to 11 percent.
"The contribution from all emerging markets as a whole was over 80 percent (versus the 2000-2006 average of 45 percent). The G7 has only contributed 20 percent in the past two years. While the 2000-2006 contribution to global growth was almost equally split between the developing and developed world, the last two years saw the trend change sharply, with the divergence mainly driven by the BRICs.
On an individual country basis, all of the BRICs and seven of the N-11 (Bangladesh, Egypt, Indonesia, Iran, Nigeria, Philippines and Vietnam) contributed more to world growth in 2007-2008 than from 2000 to 2006.
Between 2007 and 2009 Mexico, Russia and Turkey saw the deepest downturns in the two groups (BRIC and N-11). These three countries saw their economies shrink in 2009. China, India, Indonesia and Bangladesh experienced only relatively mild slowdowns.