Have the BRICS lost their allure?

Aon’s latest political risk report has found that the BRICS have grown increasingly risky for international business, with mounting concern over political violence, government interference and sovereign non-payment risk.

Brazil risk rating was downgraded by Aon due to perceived economic weaknesses and concerns over it hosting the World Cup in 2014 and the Olympics in 2016.

Russia’s risk rating was downgraded following its aggressive land grab in the Crimea, with the downgrade underscored by weak operating environment for business and exchange transfer risks that have been further exacerbated by the crisis. Government-led growth has stalled and there is an increasing risk of political violence.

India faced a downgrade due to considerable legal and regulatory risks that have been heightened by ongoing corruption and high levels of political interference. The report also found elevated risk of political violence.

China’s downgrade was on the back of slowing economic growth and a general increase in political violence.

While South Africa has been hit by recurrent strikes, the report found, which have weakened the outlook for business and raise financing costs.

2014 saw a general downward trend in political risk internationally, with 16 countries receiving downgrades, while only six received upgrades.

Countries upgraded were: Ghana, Haiti, Laos, Philippines, Suriname and Uganda

Countries downgraded were: Brazil, China, Eritrea, India, Jordan, Kiribati, Micronesia, Moldova, Russia, Samoa, South Africa, Swaziland, Tonga, Tuvalu, Ukraine and Vanuatu.