The world’s eyes were on the BRICS Summit 2023 that took place in Johannesburg, South Africa, last month in August. The block inducted six new countries including Saudi Arabia, Argentina, the UAE, Egypt, Iran, and Ethiopia.
Over the last few years, BRICS has continued to grow stronger with its GDP in purchasing power parity (PPP) now contributing more than one-third of the global economy. As of September 2023, the collective GDP of BRICS nations in terms of purchasing power parity has expanded to encompass 37.3% of the total global economy.
This signifies a share of more than one-third of the world’s economic output, and there is potential for further growth in PPP in the years ahead. Furthermore, BRICS member countries now collectively span 48.5 million square kilometers, encompassing approximately 36% of the globe.
This increased alliance strength allows it to have a more significant influence on the global economy, particularly in terms of exports like crude oil and natural gas. Consequently, BRICS may eventually gain greater control over oil exports to Western countries and have the authority to determine whether to continue using the U.S. dollar for trade or opt for a new or indigenous currency.
The alliance comprises 3.6 billion individuals, representing approximately 45% of the world’s total population. Within the group, there is command over 30% of the global economy and a dominant presence in the oil markets, accounting for 42% of the share. The combined GDP of these nations currently amounts to $31.75 trillion, surpassing the U.S. GDP of $25.5 trillion as of September 2023 by a significant margin.
According to Bloomberg’s estimation, the GDP of the expanded BRICS alliance may potentially account for as much as 50% of the global economy by the year 2050. In summary, the forthcoming decades hold the potential to reshape the financial landscape, shifting influence from the Western world to the East. This transformation could empower developing nations to have a greater influence in bilateral relationships compared to their developed counterparts.
While there were multiple talks about the BRICS currency before the summit, this isn’t in the making. China, Russia, and India appear reluctant to relinquish authority over their respective currencies, unlike several European nations that adopted the euro and established the European Central Bank (ECB).
India’s Foreign Minister, Subrahmanyam Jaishankar, has already rejected the notion, stating that “there is no idea of a BRICS currency.” While Russia’s Putin was less explicit, he did not openly endorse the concept either. China might entertain the idea, but primarily due to its considerable economic and financial influence, which could turn a common currency into an extension of the yuan.
On the other hand, the BRICS adoption of any digital assets looks unlikely considering their volatility. India and China – the two top economies of the BRICS nations have openly denounced the use of digital currencies.
