Emerging and growth-leading economies (EAGLEs) are the key emerging economies that are expected to lead global growth in the next decade.
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EAGLEs is a grouping acronym created in late 2010 by BBVA Research to identify all emerging economies, whose expected contribution to world’s gross domestic product (GDP) in the next ten years is expected to be larger than the average of the G7 economies, excluding the United States. This is a dynamic concept where country members can change over time according to their forecasted performance relative to developed economies. In a first approach ten economies, sorted by relevance, have been identified: China, India, Brazil, Indonesia, South Korea, Russia, Mexico, Egypt, Taiwan and Turkey.
As world economic growth rotates from developed to developing countries there has been increasing interest in identifying emerging markets that will become global leaders, as well as increasing lobbying of some countries to be included in the BRIC definition. However, many economists have argued that the BRIC concept (Brazil, Russia, India and China) is outdated and have proposed alternative definitions. The EAGLEs concept is similar to other proposals in going beyond BRICs (such as the CIVETS, Next 11 or 7 percent club) but its methodology differs from others’ in several ways:
There were several attempts over the years trying to implement the economic concept that will the best reflect the potential of emerging markets in the coming years. After coining the BRIC concept by the Goldman Sachs in 2001, there were other endeavors to find the best grouping acronym such as: CIVETS, Next Eleven, 7 per cent club and the EAGLEs.
In January 2011, Goldman Sachs decided to re-define its current definition of Emerging Markets and proposed a new term “Growth Markets”. The separation of Growth Markets from Emerging Markets is aimed to show the world’s most dynamic economies – those that are at least contributing 1 per cent to global growth (outside of the Developed World). In the first approach, eight economies have been identified and they were: BRIC economies plus Mexico, South Korea, Turkey and Indonesia. This particular shift in terminology was initially proposed by BBVA Research (later followed by Goldman Sachs) with the aim of switching from the existing static concept to something more dynamic, that could better indicate market potential.
According to BBVA research forecasts, world’s incremental GDP in the current decade is anticipated to grow over US$41 trillion adjusted by purchasing power parity (PPP). EAGLEs share will be slightly above 50% whereas the G7 share will only reach 14%. As reported by BBVA research, China will play a key role during this decade representing almost 30% of total world growth; 2.4 times more than the other three BRIC countries. India and Brazil are expected to be the second and third highest contributors, followed by Indonesia and South Korea. Each will contribute to world growth more than Russia, and if combined they will be 1.5 times higher than Brazil. Next on the list is Mexico whose contribution is envisioned to surpass that of Germany or the UK, in spite of its current GDP size (adjusted by PPP) is only 53% and 71% respectively. Finally on the list there are: Egypt, Taiwan and Turkey whose Incremental GDP is predicted to be substantially larger than other developed economies, i.e., Canada, France and Italy.
EAGLEs: Size and Incremental GDP
Gross Domestic Product (USD PPP 2010 Trillion, Constant Prices)
| Country | 2010 | 2020 | Incremental GDP |
|---|---|---|---|
| China | 10.1 | 22.7 | 12.6 |
| India | 4.0 | 7.6 | 3.6 |
| Brazil | 2.2 | 3.9 | 1.7 |
| Indonesia | 1.0 | 2.0 | 0.9 |
| South Korea | 1.5 | 2.2 | 0.7 |
| Russia | 2.2 | 2.8 | 0.6 |
| Mexico | 1.5 | 2.1 | 0.5 |
| Egypt | 0.5 | 0.9 | 0.4 |
| Taiwan | 0.8 | 1.2 | 0.4 |
| Turkey | 1.0 | 1.4 | 0.4 |
| EAGLEs average | 2.5 | 4.6 | 2.1 |
| Japan | 4.3 | 5.0 | 0.7 |
| Germany | 2.9 | 3.4 | 0.4 |
| United Kingdom | 2.2 | 2.6 | 0.4 |
| Canada | 1.3 | 1.7 | 0.3 |
| France | 2.1 | 2.5 | 0.3 |
| Italy | 1.8 | 1.9 | 0.2 |
| G6 average | 2.4 | 2.8 | 0.4 |
| United States | 14.6 | 18.2 | 3.6 |
| G7 average | 4.2 | 5.0 | 0.9 |
As part of the EAGLEs proposal, the EAGLEs’ Nest is a second set of countries with expected Incremental GDP in the next decade to be lower than the average of the G6 economies (G7 excluding the U.S.) but higher than Italy’s, the country which is anticipated to contribute least to global growth within the G7. The members are Thailand, Nigeria, Poland, Colombia, South Africa, Malaysia, Pakistan, Vietnam, Bangladesh, Argentina, Peru, and the Philippines. Altogether their Incremental GDP will be almost 8% of total world growth.
| Country | Average growth needed to
become an EAGLE (2010–2020) |
The difference between
required and forecasted growth |
|---|---|---|
| Thailand | 5.5 | 0.3 |
| Poland | 4.4 | 0.9 |
| Nigeria | 7.5 | 1.0 |
| South Africa | 5.6 | 1.4 |
| Colombia | 6.6 | 1.5 |
| Argentina | 5.2 | 1.6 |
| Malaysia | 6.9 | 1.7 |
| Pakistan | 6.2 | 1.8 |
| Vietnam | 9.1 | 2.3 |
| Bangladesh | 9.4 | 2.7 |
| Peru | 9.3 | 3.4 |
| Philippines | 7.8 | 3.5 |
The following two tables are predictive lists of fifty largest economies by incremental GDP from 2010 to 2016 by International Monetary Fund. The EAGLEs and the EAGLEs' Nest are in bold.
| Predictive List of Economies by Incremental Nominal GDP from 2010 to 2016[1] | Predictive List of Economies by Incremental GDP (PPP) from 2010 to 2016[2] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Arising controversy around the BRIC acronym entailed debate about the drawbacks assigned to a measurement of the economic significance for emerging markets. Indeed, South Africa is unquestionably a key African market but is it enough powerful to make it to a BRIC group? On the contrary, Egypt could be considered to be a better take, even though its economy is relatively smaller but is expected to deliver more to the world’s growth in the coming years. Eventually, current political instability triggered black clouds above its economy that could result in losing its position as an EAGLE member.
The Egyptian economy has performed better than others in Africa over the last twenty years, driven mainly by a dynamic population and stable institutional environment (regarding policy and regulatory framework), guaranteed by the Hosni Mubarak regime. With recent changes in events, it is too early to assess its possible impact on the long term growth rate of this country. The experience of previous cases obviously offers only limited guidance, but it does suggest that the peaceful democratic transitions usually generate positive or neutral effects on growth. Possible fall out of the EAGLEs’ group is significant due to contractions in its activity but on the other hand falling out of Nest, would required a more severe shock which could only arise if the political transition will worsen triggering the collapse of the economy (e.g., civil war).
(To delve deeper into the case of Egypt, refer to Economic Watch Can Egypt continue to be an EAGLE? BBVA Research 16/03/2011)
BBVA EAGLEs was presented on November 15, 2010. It has been referenced by the media world wide several times.
Media, both national and international, have covered the new concept coined by BBVA Research on emerging economies called EAGLEs.