“We’re talking about the whole BRIC story, the $27trillion that’s going to be spent on infrastructure in the emerging world over the next 10 years, largely funded by internally generated revenues — that’s a fact,” Sosa says. “It’s not going to stop because we’re having a bit of a housing slump in the US and some other countries: the BRIC countries don’t export houses.”
The major parts of the BRIC story are absolutely intact: the massive growth in the middle class, particularly in India and China, which have very young populations, and those populations are moving into urban areas and earning more money. We think that underlying story is unstoppable, from every perspective, and that’s going to continue. If anything it’s going to accelerate: if you think that oil prices and fertiliser prices are going up, that simply provides further impetus to move into an urban area — to quit farming jobs.
“So this crisis is ultimately not going to affect India and China, it is a short-term blip. Now, if we talk about oil going to $US200-250 a barrel and staying there, that is a whole different story. A spike in oil to $150-200 a barrel in the near future is certainly not out of the question, but those kinds of prices build in their own fall, because global economic growth contracts.”
The question that investors have to ask themselves, says Sosa, is whether they can see the benefit in investing in the BRIC countries, which have young populations, and have tremendous internal markets, and which are growing at three to four times the rate of most G7 countries