2023-09-03 09:20:58
The expansion decision, effective January 1, 2024, was announced at the recent BRICS summit held in Johannesburg.
Currently China contributes 70 per cent of the BRICS’ GDP, which will decline to 62 per cent, while India chips in with 13 per cent now that will inch down to 12 per cent. Russia contributes 8 per cent, Brazil is at 7 per cent and South Africa contributes a paltry 2 per cent, giving combined 26 per cent of global economic output.
Russia’s share will fall 7 per cent, while that of South Africa will halve to 1 per cent but Brazil’s share will remain unchanged following the expansion, the report said sans offering a reason for the exception of Brazil.
Among these six economies, with Rs 6,81,259 crore in bilateral trade in FY23 the UAE is the largest trading partner for India, followed by Saudi at Rs 4,23,834 crore, Egypt at Rs 48,792 crore, Argentina at Rs 39,100 crore, Iran at Rs 18,680 crore and Ethiopa at Rs 5,154 crore, said Soumya Kanti Ghosh, chief economic adviser at State Bank of India.
Among the new members, Saudi Arabia will be the biggest economy chipping in with 4 per cent GDP contribution, followed by Argentina, the UAE and Egypt with 2 per cent each, and Iran adding 1 per cent incremental to the GDP with Ethiopia’s addition making practically no impact to the grouping’s economy. The Saudi economy was regarding USD 1.1 trillion in 2022 (already a G20 member), Argentina’s at USD 632 billion, the UAE’s at USD 507 billion, Egypt at USD 477 billion, Iranian economy stood at USD 388 billion and that of Ethiopia at USD 127 billion, according to the available data. These six economies will add 11 per cent to the current GDP of the BRICS, Ghosh said in the report, which is 4 per cent of the global GDP in 2022 terms and will help boost the BRICS+6’s share to 30 per cent, he added.
Even following the new addition, China (USD 18.1 trillion in 2022) and India (USD 3.75 trillion) will continue to contribute 74 per cent of the overall GDP of the grouping, down from 83 per cent of the USD 26.2 trillion economy pre-expansion.
Russian economy was USD 2.2 trillion in 2022, while Brazil’s was USD 1.8 trillion and South Africa’s was at USD 468 billion.
BRICS+6 and G20 (Group of 20 largest economies) have their share in the global population at 3.7 billion and 5.1 billion, while that of GDP share is USD 29.2 trillion and USD 70.4 trillion, and forex reserves at USD 5.5 trillion and USD 9.4 trillion, respectively now.
Currently, the five-member grouping is home to 40 per cent of the world’s population, which controls 26 per cent of the global GDP, But with the six new members (BRICS+6), their GDP share will jump to 30 per cent and share of population will go up to 46 per cent.
However, the biggest impact will be on the share of global oil production that will increase to 40 per cent from the current 18 per cent, while their oil intake share will jump from 27 per cent to 36 per cent, according to the note.
Similarly, their share in global merchandise trade will rise from 20 per cent to 25 per cent, and that of global services trade will increase to 15 per cent from 12 per cent, the note said, adding that their share in the global forex reserves will increase by 600 basis points to 45 per cent.
On the massive increase in the share of oil trade — Saudi has the second largest oil reserves following Russia — the oil math will be the potential game changer for payment system and price discovery, says the report.
The acronym BRICS was originally coined in 2001 by Goldman Sachs economists led by Jim O’Neill. Later in December 2010, South Africa was added as the fifth member.
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