Expansion Would Add More Bang to BRICS Bucks

As the #BRICS Summit approaches, South Africa is pondering inviting other large emerging economies to join an expanded BRICS+. The move would give more tail wind to the BRICS currency under consideration as a key item on the agenda.

The combined #GDP in PPP terms of BRICS recently surpassed that of the #G7 as announced in March 2023. In relative terms, BRICS now account for 31.5% of global GDP compared to 30.7% for G7. This has occurred sooner than what Goldman Sachs had predicted back in 2009 when BRICS was believed to be able to overtake G7 in 2027.

Aspiring to be the economic platform representing the #GlobalSouth, BRICS are mulling to launch its own currency, or at least promote the use of national currencies in intra-BRICS exchanges. The Ukraine-Russia conflict has witnessed economic sanctions on BRICS founding member Russia via restrictions upon accessibility to USD, the currency most commonly used the most for international trade. However, Russia has been able to mitigate the economic sanctions in part via the use of its own ruble or other mutually accepted currencies with trading partners. Other countries are also considering taking an insurance policy against the USD in case their relationship with the USA goes south.

Bangladesh has formally applied for BRICS membership and has been invited to the BRICS Summit in South Africa. The Bangladeshi side indicated that if the official invitation is received, then its PM Sheikh Hasina would certainly be glad to participate in he BRICS Summit.

Prior to the BRICS Summit, South Africa hosted a extended family reunion dubbed the ‘Friends of BRICS’ meeting where countries from the #GlobalSouth with similar affinities and outlook would come and work together. The Friends of BRICS actually comprises many countries wishing to integrate the bloc, but the founding members are yet to make a formal and firm stand on the membership.

BRIC started out with Brazil, Russia, India and China. Then, South Africa joined the club and BRIC became plural. Other than Bangladesh, it is rumored that Saudi Arabia, Iran, United Arab Emirates, Nigeria and Indonesia might join BRICS in the future.

Towards the end of June 2023, French President Macron also publicly made an announcement regarding his wish to attend the BRICS Summit. France is a developed country and a member of G7, so a ‘special formula’ would need to be found to accommodate it. Perhaps, observer status would be fitting, but knowing Macron, he would certainly have a thing or two to say.

During his official visit to China, US Treasury Secretary Yellen was quizzed by reporters about the so-called ‘#dedollarization.’ She affirmed confidently that she does not see the supremacy of the USD as the preferred currency for international trade being challenged for the ‘foreseeable future.’ Actually, the two giants in BRICS, China and India, have indicated that a gradual and measured move away from the USD would be perhaps preferable.

Therefore, it would be more appropriate to talk about diversifying away from USD rather than outright ‘#dedollarization.’ In case countries are no longer in the good books of the USA, the diversification strategy would somewhat shield their economies from adverse effects USD weaponization.