Originally published September 4, 2023 6:00 pm PDT
In a groundbreaking move that may have considerable implications for the global financial landscape, the BRICS consortium (comprising Brazil, Russia, India, China, and South Africa) is set to see its share in global GDP jump to 30% in January 2024, as per a research report from the State Bank of India.
This rise is from the current 26%, and it comes in the wake of six nations—Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates—preparing to join the BRICS fold, according to TASS.
Notably, these nations collectively contribute 4% to the global economic output.
The research reveals that currently, China is the dominant player within BRICS, contributing over 70% to its combined GDP. India follows with 13%, Russia with 8%, Brazil with 7%, and South Africa with 2%.
Together, they account for 26% in global GDP.
Another major shift anticipated with the inclusion of these nations is in the realm of global oil production.
The BRICS’ share in this sector is expected to surge from the present 18% to a whopping 40%.
Such an increment, as described in the note, is “expected to be the potential game changer for payment system and price discovery,” Tass comments.
Further, it’s not just the GDP or oil sectors that will feel the BRICS’ enhanced presence.
The conglomerate’s contribution to the global merchandise trade will see an uptick from 20% to 25%, while the services trade segment will witness a growth from 12% to 15%.
Moreover, their stranglehold over global forex reserves is projected to strengthen by 600 bps to 45%.
The inclusion of these countries into BRICS will also translate to the grouping controlling 46% of the world’s population in 2024, a significant demographic power.
Highlighting the scale and significance of these changes, the decision for the six nations to become part of BRICS, finalized at the organization’s summit in Johannesburg, is slated to become effective on January 1, 2024.
For the U.S., these shifts signal a need for recalibration and heightened attention.
As BRICS expands its influence in numerous sectors, the global balance of power in finance and trade may undergo a seismic shift.
It’s imperative for the U.S. to not only monitor these developments but also strategize its position in this evolving landscape.
