BRICS is an acronym for the five leading emerging economies globally. The term was first coined as BRIC, with South America being added later in 2010. As the years have passed and economic growth is being seen in varying ways from country to country, Mexico is looking to be one of the next nations to join BRICS due to its development.
Mexico has been a part of the ‘Next Eleven’ for many years showing that it has the new potential to join this growing group of economies. We have seen the forex market move positively between Mexican and American currencies, with a sharp 2.3% rise through 2022.
We expect Mexico to be one of the next nations to join BRICS. Here is a little more about where it all started.
What is BRICS?
BRICS is an abbreviation for Brazil, Russia, India, China, and South Africa. The term was first coined by Jim O’Neill 2001, an economist at Goldman Sachs, initially not including South Africa. O’Neill predicted that the economies of BRIC would become the dominant force in the world by 2050. The list added South America in 2010.
During the early 2000s, this theory gained widespread acceptance in the financial markets. However, there were always doubters, with some even claiming that the phrase was merely a marketing ploy by Goldman Sachs. Nowadays, the topic of BRICS and their global dominance is rarely discussed. Goldman Sachs has since finished its BRICS-focused investment fund, combining it with a much broader emergence of market funds.
For years, Brazil, Russia, India, China, and South Africa had been among the fastest-growing market economies across the world, benefiting from favorable demographics, low-cost labor, and plentiful natural resources through a boom of global commodities.
It’s worth noting that the hypothesis did not propose that these nations would form an alliance or even a traditional trading association, unlike the European Union. Instead, Goldman stated that they had the prospect of creating a robust economic bloc, recognizing that their predictions were ambitious and based on substantial policy assumptions.
Nonetheless, the sense was that economic clout would translate into political influence, with leaders from these countries regularly attending summits together and frequently coordinating their interests.
The BRICS Thesis at Goldman Sachs
Goldman Sachs economist Jim O’Neill predicted in 2001 that the BRIC nations would grow faster than the Group of Seven and become a powerful economic bloc. O’Neill’s paper “Building Better Economic BRICs” outlined his vision for the potential of these countries.
In 2003, “Dreaming with BRICs: The Path to 2050,” a report by Dominic Wilson and Roopa Purushothaman, colleagues of O’Neill, forecasted that the BRIC cluster could outstrip the G6 in size by 2050, leading to a shift in economic power from the wealthiest nations based on per capita income to the BRIC nations.
Another report was published in 2007 by Goldman Sachs, known as “BRICs and Beyond,” which centered around the countries that made BRIC, the potential growth that could cause an environmental impact, and how sustainable this rise would be. Also, in this report, the Next 11 was introduced, which was set to be the next 11 countries to see a growth or economic boom.
The Next Eleven
Goldman Sachs introduced the term Next Eleven, or N-11, in 2005 to identify eleven countries with the potential to rival the G7 nations, similar to the BRIC nations. Despite being smaller than G7 and BRIC members, the investment bank predicted future growth for these countries. The N-11 countries are Indonesia, Bangladesh, Iran, Mexico, Egypt, Nigeria, Pakistan, Turkey, South Korea, the Philippines, and Vietnam. Most of the group’s GDP comes from Mexico, Indonesia, South Korea, and Turkey, which have experienced significant economic growth in recent years.
Investing In N-11
Investors interested in investing in the Next Eleven economies have several investment options at their disposal, including mutual funds and ETFs (Exchange-Traded Funds). ETFs are typically considered the most straightforward way to invest in N-11 economies. They provide instant diversification and directional exposure through a single security traded on a U.S. stock exchange.
Trading In Mexico
Mexico is one of Latin America’s most vibrant and upcoming markets. As the forex industry grows, so do other countries. The stability and liquidity surrounding the Mexican Peso mean that the country’s economy is growing. New investor-friendly policies that the government has brought forward are another reason the economy is starting to see such a flourish.
A Developing Trading System
The financial system surrounding Mexico is very stable, but this doesn’t guarantee security for investors as the government takes no responsibility for any trades of this nature. The good thing is that you will be working with a reasonably stable currency, but it means you will have to search for a broker yourself. This could benefit many investors as they could already be accustomed to a particular platform that gives them good commissions and security.