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S&P: BRICS grouping may no longer be 'coherent'

The countries that make up the BRICS have had such disparate paths in economic development since the acronym's introduction in 2001 that grouping them together may no longer make sense, S&P Global Ratings said in a report.

The acronym for Brazil, Russia, India, China and South Africa was based on the widely held perception that these countries had similarly promising growth prospects and would play a key role in shaping the global economy. However, since then only China and India have maintained stable pro-growth economic policies and expanded their role in the global economy, while the other three countries have recorded poorer long-term performance and consequently weakened their influence.

"As a result, their disparate paths weaken the analytical value of viewing the BRICS as a coherent economic grouping," the rating agency said.

Ratings' economic assessment of the countries ranked India and China positively, reflecting their track record of faster per-capita GDP growth, and rated the other three economies relatively poorly due to weaker expansion. The agency expects China to maintain GDP growth of around 5% on average in the coming years, while India's economic output will also remain strong.

The agency's ratings for BRICS countries have also diverged since 2001, with China rising to A+ from BBB and India to BBB- from BB due to their stable and predictable economic policies despite vastly different political systems.

Meanwhile, South Africa dropped to speculative-grade BB from BBB- while Brazil remained at BB-, reflecting the inability of both countries' political leaderships to effectively restore economic growth and stabilize public finances.

Russia also saw an improvement in its credit rating to BBB- from B+ in 2001, but its GDP growth rate has remained "disappointing" due to structural weakness.