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29
Nov
2010

The BRIC promise of the middle-class purse

POSTED BY Global Administrator
The BRIC economies (that is Brazil, Russia, India, and China) need little introduction these days- the phrase has been around for nearly a decade since it was coined by Goldman Sachs- but as we approach 2011 does the acronym still represent the huge economic potential first written about by the investment bank?

In its second decade, the answer, again according to Goldman Sachs, is that the rise of the BRICs middle class will create unprecedented opportunities, and constitute a second phase of the rise of these economies. This will have clear implications for device manufacturers and operators across the globe.

To quote a Goldman Sachs research note from May this year: "In terms of the size of economy economy, by 2020, Brazil will be larger than Italy; and India and Russia will be individually larger than Spain, Canada or Italy." What is more, "by 2020, we expect the BRICs to account for a third of the global economy and contribute about 49.0% of global GDP growth," says Goldman.

From the perspective of the mobile industry, the most important sign of this rise of the BRIC middle class will be an acceleration in demand for services and products such as smartphones, associated data subscriptions, mobile content and the rest.

Growth in the middle class will be led by China, and middle class growth in India will accelerate throughout this decade, says Goldman Sachs. As China and India are the world’s two most populous countries, rising incomes there will have much greater impact on global demand than any other countries could, says the bank. This explains, of course, the focus on such economies by companies like Nokia, Dell and ZTE, to name but a few vendors, and global operators (Telefonica, TIM and Portugal Telecom in Brazil and Vodafone in India, for example). It also accounts for why Vodafone has just doubled its money in China, achieving $6.5 billion for 3.2% of China Mobile.