The worlds emerging powerhouses (Brics) have experienced contrasting score changes during Q3 2012. Whereas South Africa, Russia and, to a lesser extent, India have all seen their risks ease, Brazil and China have seen more deterioration the latter especially so, which is a concern given its size and influence on the global stage.
Given these trends, the two giants have now exchanged places in ECRs rankings symbolic perhaps, but still a substantial development given Chinas superior A-grade credit ratings, vis-à-vis B-graded Brazil. These ratings now appear outdated, according to ECRs survey.
As for the other Brics, Russia has seen a substantial improvement during the quarter, moving up two places to 59, and above India (down one to 60th). Yet Indias risks are also slowly easing, bolstered by recent market reforms, including a liberalization of rules affecting inward foreign direct investment and a privatization drive aimed at shoring up the currency and improving the balance of payments.
One of ECRs experts, Amjad Bashir, chief economist at the Lahore Chamber of Commerce & Industry, argues that "India has taken a very measured approach to reforms recently, which is going to [remove] some of the risks and concerns people have about [the] economy.
"[As for country risk], I am very optimistic about India, given the government is working on long-term capacity of Indias economy to grow. Fluctuations in market news and in market sentiment can go either way but we need to look at Indias long-term capacity, which remains very strong, and that is the reason why I am optimistic about it."