Despite complicated global economic situation, a number of leading countries demonstrate stable economic growth even during the crisis. These are, first of all, the countries of BRICS group - Brazil, Russia, India, China and South Africa (since 2010). Thus, China remains the most dynamic economy of the world with 7.8% of growth in 2012. India is not so far behind (+5.4% in 2012); in Russia GDP growth made 3.6% last year, in South Africa - 2.6%, in Brazil - 1.3%.
Together these countries take 26% of land, 43% of world population and more than 15% of global economy, or $16 trillion. So, what is the importance of this union for the world and Ukraine, in particular?
Five on the move
Already in 10 years the aggregate GDP of BRICS group may come up to GDP of G7 countries, reaching 20-25 trillion dollars, but even now this structure of emerging nations seeks strengthening of international influence, considering ambitious Beijing. Economy of China holds the second place in the world ($12.4 trillion in 2012) after the United States, and by 2050 may outrun it and reach $70 trillion. It is not a secret that China has been carrying out active economic expansion in developing countries, including support of loyal governments in such mineral-rich countries as Nigeria, Zimbabwe, Angola, Ethiopia, Sudan.
Given the situation, BRICS also develops economic and political coordination. Thus, at the latest summit in Durban (South Africa), the leaders of five states decided to create a self-administered currency reserve of base stock of $100 billion for emergency situations. Finance ministries and central banks of the group were charged with its formation, including the legal base.
Moreover, BRICS intends to create a Development Bank, which may compete in the future with such structures as the World Bank and IMF. Speaking at the summit Russian President Vladimir Putin pointed out the importance of the merge, business support, mutual trade and investments, as well expansion of industrial and technological cooperation. "Russia supports the establishment of this financial institution. We are working on the basis that if established, it will operate according to market principles," Putin said. As a reminder, in 2011-2012 BRICS offered to support the stagnating economy of the European Union with credits and other projects of total amount of $120-130 billion.
Country by country
As for our country, in 2012 Ukraine imported from BRICS 43% of goods and services, including 3/4 from Russia. In the export structure BRICS countries take 32.3%. Both figures are significant, and though Moscow remains a special partner with the biggest share of foreign trade, export to China starts take up positions as well. Thus, for the first half year of 2013 it has grown by 60.7% to $1394 million, mainly thanks to iron ore raw materials (IORM), which takes 61% of domestic export to this country. In January-June period the IORM supplies increased by 19.4% to $850 million. In turn, Chinese import has grown by 19% to $4 billion (mainly electrical machinery - 28.6% of import structure). In total, in 2013 goods turnover with Beijing has already exceeded $10 billion ($9.6 billion in 2012).
Analysts believe that among promising export goods to China there are chemical products (oils and lubricants, fertilizers, various chemical additives, etc.), biotechnological products and technologies for pharmaceutical, perfume and food industry, agriculture, including technologies of recultivation, biodegradation of waste and recycling, methods and equipment for bio-treatment of water and air. We also should not forget military machinery, including ships, planes, modern armament, etc. Anyway, cooperation with China grows increasingly diversified, and agricultural sector becomes more and more important. Thus, in 2012 Ukraine and China singed a protocol on credit of $3 billion for the agricultural industry. According to economist Vitaly Melnychuk, China is interested in agriculture given growing consumption of food products. "No surprise that for the past ten years food supplies from Ukraine to China have been growing by 25% annually, and in the near future Chinese investments into our agro-industrial complex may reach $10 billion."
Then, export to India has drop for the first year half by 11.1% to $1049 million due to reduced supplies of fats and oils (dominant share of export structure). In total, in 2012 annual goods turnover with Deli exceeded $3 billion. Among promising export goods to India, expert Vitaly Kulik names production of Ukrainian engineering industry. Thus, export of electrical machinery grew by 20.9% (to $34 million) last year and made 3.2% in total export structure. Considering that many Indian industrial enterprises were built in the second half of XX century by soviet specialists, the position of domestic heavy engineering is still strong there. In turn, Ukraine imports from India mainly food products and goods of light industry, and future prospects may include supplies of motor transport - Tata automobiles are the cheapest in the world.
As for Brazil, this country purchases mainly Ukrainian fertilizers (56.8% of export) and ferrous metals (18.5%). At the same time there are prospects of cooperation in space industry. Now Kyiv prepares joint projects, including on spaceport Alcantara (Centro de Lançamento de Alcântara). As for import, industrial inputs, including IORM and coking coals for metallurgy, are most promising. Calculations and test supplies prove that regardless of distance and transportation costs, the price and quality remain interesting for Ukrainian metallurgists.
Summing up, Kulik says that export of machinery and equipment, as well as certain types of raw materials, remains a promising sector of cooperation with BRICS. In several years aggregate Ukrainian export to BRICS may reach $30 billion, and import may make $35-40 billion, focusing mainly on raw materials and certain types of equipment from Russia and China.
With a view to the future
Speaking about the importance of BRICS as a union, specialists admit that Ukraine may become one the targets for investments by BRICS Development Bank. President of the Center for market reforms Volodymyr Lanovyi notes that BRICS investors are mostly interested in projects and assets of the agricultural sector, extraction of raw materials and infrastructure. Moreover, BRICS loans may reduce Ukraine's dependence on such structures as IMF and EBRD.
At the same time, BRICS should be considered as an independent course of foreign policy, somewhat ignoring Moscow as its participant and strengthening the dialogue with China, Kulik says. It does not mean we should fall under influence of Beijing, but to develop equal partnership in various spheres.
Will we ever be able to join BRICS as an equal partner? Expert of Goldman Sachs Michael Breitman does not rule such possibility in a 10-15-year term. Comparing GDP volumes, in Ukraine it made $160 billion in 2012, and in South Africa - $385 billion. Moreover, we have an economy of an industrial country with big potential of development, Breitman believes. And if starting from 2015 it can grow by 4-5% annually, in 10-15 years Ukraine may reach the level of BRICS countries. By 2015 the group may be renamed into certain BRICUS, and Ukrainian economy may join the team of the fastest growing countries of the world.
Andriy Boyarunets
Together these countries take 26% of land, 43% of world population and more than 15% of global economy, or $16 trillion. So, what is the importance of this union for the world and Ukraine, in particular?
Five on the move
Already in 10 years the aggregate GDP of BRICS group may come up to GDP of G7 countries, reaching 20-25 trillion dollars, but even now this structure of emerging nations seeks strengthening of international influence, considering ambitious Beijing. Economy of China holds the second place in the world ($12.4 trillion in 2012) after the United States, and by 2050 may outrun it and reach $70 trillion. It is not a secret that China has been carrying out active economic expansion in developing countries, including support of loyal governments in such mineral-rich countries as Nigeria, Zimbabwe, Angola, Ethiopia, Sudan.
Given the situation, BRICS also develops economic and political coordination. Thus, at the latest summit in Durban (South Africa), the leaders of five states decided to create a self-administered currency reserve of base stock of $100 billion for emergency situations. Finance ministries and central banks of the group were charged with its formation, including the legal base.
Moreover, BRICS intends to create a Development Bank, which may compete in the future with such structures as the World Bank and IMF. Speaking at the summit Russian President Vladimir Putin pointed out the importance of the merge, business support, mutual trade and investments, as well expansion of industrial and technological cooperation. "Russia supports the establishment of this financial institution. We are working on the basis that if established, it will operate according to market principles," Putin said. As a reminder, in 2011-2012 BRICS offered to support the stagnating economy of the European Union with credits and other projects of total amount of $120-130 billion.
Country by country
As for our country, in 2012 Ukraine imported from BRICS 43% of goods and services, including 3/4 from Russia. In the export structure BRICS countries take 32.3%. Both figures are significant, and though Moscow remains a special partner with the biggest share of foreign trade, export to China starts take up positions as well. Thus, for the first half year of 2013 it has grown by 60.7% to $1394 million, mainly thanks to iron ore raw materials (IORM), which takes 61% of domestic export to this country. In January-June period the IORM supplies increased by 19.4% to $850 million. In turn, Chinese import has grown by 19% to $4 billion (mainly electrical machinery - 28.6% of import structure). In total, in 2013 goods turnover with Beijing has already exceeded $10 billion ($9.6 billion in 2012).
Analysts believe that among promising export goods to China there are chemical products (oils and lubricants, fertilizers, various chemical additives, etc.), biotechnological products and technologies for pharmaceutical, perfume and food industry, agriculture, including technologies of recultivation, biodegradation of waste and recycling, methods and equipment for bio-treatment of water and air. We also should not forget military machinery, including ships, planes, modern armament, etc. Anyway, cooperation with China grows increasingly diversified, and agricultural sector becomes more and more important. Thus, in 2012 Ukraine and China singed a protocol on credit of $3 billion for the agricultural industry. According to economist Vitaly Melnychuk, China is interested in agriculture given growing consumption of food products. "No surprise that for the past ten years food supplies from Ukraine to China have been growing by 25% annually, and in the near future Chinese investments into our agro-industrial complex may reach $10 billion."
Then, export to India has drop for the first year half by 11.1% to $1049 million due to reduced supplies of fats and oils (dominant share of export structure). In total, in 2012 annual goods turnover with Deli exceeded $3 billion. Among promising export goods to India, expert Vitaly Kulik names production of Ukrainian engineering industry. Thus, export of electrical machinery grew by 20.9% (to $34 million) last year and made 3.2% in total export structure. Considering that many Indian industrial enterprises were built in the second half of XX century by soviet specialists, the position of domestic heavy engineering is still strong there. In turn, Ukraine imports from India mainly food products and goods of light industry, and future prospects may include supplies of motor transport - Tata automobiles are the cheapest in the world.
As for Brazil, this country purchases mainly Ukrainian fertilizers (56.8% of export) and ferrous metals (18.5%). At the same time there are prospects of cooperation in space industry. Now Kyiv prepares joint projects, including on spaceport Alcantara (Centro de Lançamento de Alcântara). As for import, industrial inputs, including IORM and coking coals for metallurgy, are most promising. Calculations and test supplies prove that regardless of distance and transportation costs, the price and quality remain interesting for Ukrainian metallurgists.
Summing up, Kulik says that export of machinery and equipment, as well as certain types of raw materials, remains a promising sector of cooperation with BRICS. In several years aggregate Ukrainian export to BRICS may reach $30 billion, and import may make $35-40 billion, focusing mainly on raw materials and certain types of equipment from Russia and China.
With a view to the future
Speaking about the importance of BRICS as a union, specialists admit that Ukraine may become one the targets for investments by BRICS Development Bank. President of the Center for market reforms Volodymyr Lanovyi notes that BRICS investors are mostly interested in projects and assets of the agricultural sector, extraction of raw materials and infrastructure. Moreover, BRICS loans may reduce Ukraine's dependence on such structures as IMF and EBRD.
At the same time, BRICS should be considered as an independent course of foreign policy, somewhat ignoring Moscow as its participant and strengthening the dialogue with China, Kulik says. It does not mean we should fall under influence of Beijing, but to develop equal partnership in various spheres.
Will we ever be able to join BRICS as an equal partner? Expert of Goldman Sachs Michael Breitman does not rule such possibility in a 10-15-year term. Comparing GDP volumes, in Ukraine it made $160 billion in 2012, and in South Africa - $385 billion. Moreover, we have an economy of an industrial country with big potential of development, Breitman believes. And if starting from 2015 it can grow by 4-5% annually, in 10-15 years Ukraine may reach the level of BRICS countries. By 2015 the group may be renamed into certain BRICUS, and Ukrainian economy may join the team of the fastest growing countries of the world.
Andriy Boyarunets
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