BRICs Show No Improvement in Capacity to Withstand Shocks from Global Risks

The BRIC countries of Brazil, Russia, India and China are no better placed to withstand shocks from major risk events than they were four years ago, according to risk analysis firm Maplecroft in a new report. The findings of the Global Risks Atlas 2012 indicate that strong economic performance in the BRICs has not translated into improved societal resilience or governance, which constrain a country’s ability to adapt and combat potential shocks from pandemics, terrorism, conflict, resource security, economic contagion and the impacts of climate change.

The fourth annual Global Risks Atlas highlights potentially destabilising factors in the world’s key growth economies. Maplecroft classifies global risks as those that cut across borders, affecting multiple areas of the world with major impacts on countries and business alike. The Atlas covers 178 countries and includes 33 indices within five global risk areas, which calculate exposure to macroeconomic risk, security, resource security, climate change and infectious diseases. It also evaluates governance and societal resilience to measure how prepared nations are to adapt to the impacts of global risks.

“With hopes for a global economic recovery resting with the BRICs, investors and business seeking new high-growth, high-risk markets need to be aware of their limited resilience to global risks.” said Maplecroft chief executive officer (CEO) Alyson Warhurst. “A country’s resilience to external and internal shocks is built up over time, so as the BRICs political risk environment improves we might see resilience strengthen, but our results reveal this is yet to happen.”

The 10 countries most exposed and least resilient to global risks are: Somalia (1), DR Congo (2), South Sudan (3), Sudan (4), Afghanistan (5), Pakistan (6), Central African Republic (7), Iraq (8), Myanmar (9) and Yemen (10).

For investors and business though, it is the resilience of the BRIC economies to withstand global risks that is increasingly important, as they become central to the fortunes of the global economy due to their increased economic might and integration with individual economies.

According to the Atlas findings, none of BRICs have improved their performance in relation to their resilience to global risks over the course of the past four years. This is despite cumulative GDP growth between 2009 and 2012 of 16% for Brazil, 13% for Russia, 28% for India and 32% for China.

“Economic gains have yet to transform the resilience of the BRICs to major risk events,” added Warhurst. “Improvements in basic social infrastructure, such as education, healthcare and sanitation for large sections of society, are vital in combating the impacts of global risks. Without these, and improvements in governance, the BRIC economies may not fully realise their investment potential.”


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