Small Business and Global Growth- The BRICS Are Crumbling

BRICS and small business

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India

India has a diverse economy, with half the workforce in agriculture but most of the growth and exports coming from its services sector.

Despite a relatively high growth rate, India’s government-owned banks face mounting bad debt. That debt and entrenched bureaucracies result in low credit growth and restrained economic growth.

The lack of decent infrastructure does not help either. Overall India has a positive growth outlook but this could be diminished by poorly thought-out or executed government actions.

South Africa

South Africa is the baby of the BRICS in terms of GDP and it too is suffering. Its GDP has slipped over the past few years.

Corruption, inequality, inflation, poverty, and unemployment are challenges the country is attempting to address. The country lacks adequate infrastructure, which will limit future growth.

On the positive side, South Africa has a diverse set of industry sectors and an abundant supply of natural resources.

If Africa proves to be a bright spot over the next few years, South Africa will be one of the leaders. But the odds of success over the near and intermediate terms are mixed.   

Bottom Line

The economic outlook for the U.S. has improved significantly since the election.

This is good news for business executives. But for those that are doing business in the BRICS countries – and other emerging markets – the news is less sanguine. The uncertainty over trade deals and their impacts will only exacerbate the challenges.

China and India are the bright spots but the Chinese government is doing all it can to ensure local firms buy locally. President Xi especially wants to reduce imports from the U.S. Thus, China spotlight is far less bright. On the other hand, India will remain the fastest growing G20 economy over the next few years.

Opportunities do exist but executives need to choose their target markets wisely.

Brazil and Russia will remain distressed economies over the next few years.

While it is true that one can make profits when there is blood in the streets, one needs to be very knowledgeable and selective when moving into troubled waters. South Africa’s weak economy, high inflation, and constraining infrastructure offers challenges and opportunities to those willing to gamble on the African continent’s future growth.

One thing is for sure, companies can no longer count on the emerging markets, especially the BRICS, to be growth drivers for their businesses. Moreover, the younger generations – millennials, generation X and Y – think differently than previous generations and must be treated differently – as employees, partners, and customers.

Plus their love for the digital economy is breaking down borders and reshaping relationships. Thus, small business and corporate strategies must be more targeted, regardless of country, and plans well executed if one’s strategy is to succeed. 

Related articles:

Why the Global Economy Matters to Your Small Business

3 Global Pressures and Economic Impacts on Business

Small Business Opportunity for 2015

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