Reading 48: Dreaming With BRICs: The Path to 2050－LOS a terms, growth, current, economic, potential

tycoon

CFA Institute Area 3-5, 7, 12, 14-18: Portfolio Management
Session 17: Portfolio Management in a Global Context
Reading 48: Dreaming With BRICs: The Path to 2050
LOS a: Contrast the economic potential of Brazil, Russia, India, and China (the BRICs) to that of the current G6 (U.S., Japan, U.K., Germany, France, and Italy) in terms of economic size and growth, demographics and per capita income, growth in global spending, and trends in real exchange rates.

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tycoon

Which of the following BRIC countries will experience the most rapid aging of its population?

A) India and Brazil.

B) India and China.

C) Russia and China.

D) Russia and Brazil.

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Answer and Explanation

Although BRIC countries have a relatively young population, they are expected to experience a decline in their working age population, albeit later than that in the G6. The aging will be more rapid in Russia and China and less rapid in India and Brazil.

tycoon

What percent of BRIC GDP growth (measured in U.S. dollars) should likely come from changes in BRIC currency values?

A) A half.

B) A quarter.

C) Zero.

D) A third.

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Answer and Explanation

About a third of the BRIC GDP growth projected until 2050, as measured in U.S. dollar terms, should come from rising BRIC currency values.

tycoon

What is the projected annual increase in global spending for BRIC countries, compared to G6 countries (measured in U.S. dollar terms) by 2050?

A) The increase in global spending for BRIC countries should be two times as large.

B) The increase in global spending for BRIC countries should be equal.

C) The increase in global spending for BRIC countries should be four times as large.

D) The increase in global spending for BRIC countries should be half as large.

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Answer and Explanation

Currently, the annual increase in global spending, measured in U.S. dollar terms, is about the same for the G6 and the BRICs as a whole. But by 2050, the annual change in spending should be four times larger in the BRIC countries.