The future is made of BRICs

Brazil, Russia, India and China are likely to drive global growth over the coming decades, despite their obvious vulnerabilities.

Delegates to Sibos were yesterday afforded a glimpse into the fast-growing quartet of leading developing nations, hearing from representatives of Brazil, Russia, India and China. The panellists detailed how the financial systems of these countries have been transformed and now underpin the strong economic growth they are enjoying.

The session was moderated by Nelson Cunningham, the managing partner of Kissinger McLarty Associates. He described studies that showed that by 2050, these four economies would have a combined economic weight equal to the G8 of today.

"This is a transformation that everyone in the room should be terrified by," he said. Giving the Asian angle on this transformation was Peter Wong, group general manager of HSBC in Hong Kong, who spoke on China's "astonishing and unprecedented growth".

He said that China's leaders were wedded to economic transformation as it was the only way they could go. The government is committed to accommodating 200 million extra people into its cities in the next 15 years and the only way that can be achieved was by maintaining its pace of economic growth, which Wong described as "staggering".

The biggest potential problems for China would likely come from changes in government policy and the internal changes within the banks. "There is also a serious lack of talent in China's internal bank market," he said.

This theme of the financial system underpinning and helping the process of transformation was echoed by the panellist from the Reserve Bank of India, G. Padmanabhan. "Transformation in India is now consensus driven," he said. "It's a process now, not an event."

He said that the emergence of a world class financial sector in India had allowed the country to achieve its true rate of growth, rather than its Hindu rate of growth. This had directly led to 70 million people being lifted out of poverty since the reform process started.

Giving the view from the global banking industry was Richard Brown, head of Asia financial institutions at Citigroup Global Transaction Services. He said that global banks can help this process of transformation and that local banks should not view them as a threat but as a partner for growth. "Global banks will help local banks grow," he said, due to the improved infrastructure standards and governance that they can bring to a local economy.

The vulnerabilities of all these economies were starkly revealed, chief among these being political instability. But having a resilient financial sector allows for these vulnerabilities and volatilities to be more easily managed within these fast growing economies.