The global economy is currently undergoing a transformation driven by the rapid rise of the BRICS group, which comprises Brazil, Russia, India, China, and South Africa. This influential group is set to have a stronger and more significant share of the world GDP in terms of purchasing power parity (PPP) than even the Group of Seven (G7) major advanced economies by 2040, as reported by Bloomberg.
In January, BRICS is expected to welcome new members, including Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. The expansion of BRICS is a clear demonstration of its growing influence and importance in the global economy. Meanwhile, the G7 consists of the US, Canada, the UK, France, Italy, Germany, and Japan.
The report from Bloomberg revealed that the expanded BRICS group is already larger than the G7, accounting for 36% of the global economy in 2022, while the advanced economy group represented 30% during the same period. The forecast suggests that the share of BRICS+ (including the new members) is expected to increase to 45% by 2040, as compared to 21% for the G7 economies. This indicates a significant shift in the global economic landscape over time.
Moreover, the expanded BRICS group will include some of the world’s largest oil exporters, such as Saudi Arabia, Russia, UAE, and Iran, as well as major oil importers like China and India. The report also highlighted the potential impact of BRICS on the global foreign exchange market and the share of the dollar in international trade, especially if these countries succeed in shifting settlement of oil transactions to other currencies.
However, the report also acknowledged the challenges facing BRICS, including China’s economic slowdown and the reluctance to promote a single alternative to the petrodollar. It suggested that the rising share of GDP and divergent political and economic systems of the BRICS group, rather than policymakers’ grand plans, could be the primary factor influencing global changes.
As the BRICS group continues to gain prominence in the global economy, its impact is expected to be profound and far-reaching. With its size, diversity, and ambitious growth plans, BRICS is set to bring significant changes to the world economy. The expansion and rising influence of BRICS highlight the shifting dynamics of the global economic order and the emergence of new powerhouses that will shape the future of international trade and finance.
In conclusion, the rise of the BRICS group signifies a major shift in the global economic landscape. With its expanding influence, the group is poised to transform international trade and finance, setting the stage for a new era of economic powerhouses and global partnerships. The evolution of BRICS and its growing share of the world GDP in PPP terms are reshaping the global economy and redefining the traditional dominance of the G7 economies.