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  • Writer's pictureCrest Economics

BRICS Expansion, new kids on the bloc- Aug 2023

A key outcome of the 15th BRICS summit, hosted by South Africa, was the decision to invite six more countries to join the group - Argentina, Ethiopia, Saudi Arabia, Egypt and the United Arab Emirates. All six countries applied for membership and are set to join in January 2024. The enlargement will grow the association’s membership to 11 and it is believed it will further the force for world peace and development.

The five current member countries – Brazil, Russia, India, China and South Africa – have argued that their size, in economic and population terms, was not represented in international organisations, such as the World Bank and the International Monetary Fund (IMF). The BRICS represent about 42% of the world’s population and more than 23% of world GDP. However, the enlarged grouping will account for 46.5% of the global population and approximately 30% of global GDP.

Although the disparate nature of the six new members is bound to spark debate about the real nature of BRICS, Xi Jinping has described this expansion as “historic”. China, the bloc’s heavyweight, has long called for an expansion of BRICS as it seeks to challenge Western dominance, a strategy shared by Russia as well. However, officials have played down an anti-west turn as, of the six new members, none are seen as anti-American states. Instead, it is reported that this expansion represents a shift towards unity and prosperous development with a collective aim to amplify the voice of the Global South. This has come to concern as quoted figures show that African countries pay four times more in debt servicing costs from international financial institutions than the United States and eight times more than the wealthiest European countries.

This is evident as Saudi Arabia and the UAE, two of the world’s biggest oil producers, might provide new capital for BRICS’ New Development Bank. With the emerging economies eager to sustain and improve their economic trajectory, the New Development Bank is a key BRICS economic development initiative that focuses on financing infrastructure development. Additionally, entry of these oil powers highlights their drift away from the United States’ orbit and ambition to become global heavyweights in their own right. As for Argentina and Ethiopia, they believe that joining BRICS “was a new opportunity” that “strengthens us”. However, economists have noted that Argentina and Egypt are the International Monetary Funds two biggest debtors and have required bailouts.

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