‘BRICS’ is a grouping acronym that refers to the countries of Brazil, Russia, India, China and South Africa - also known as the association of five emerging economies. This association was originally referred to as ‘BRIC’, after the addition of South Africa in 2011 it changed to ‘BRICS’. All five countries are part of G-20. The G-20 is an international forum for the governments and central bank governors from 20 major economies. They hold annual meetings which are more commonly referred to as summit. The first summit was held in Russia and the latest in India.
People question the importance of BRICS without knowing they play a significant role in the world. BRICS represent 3 billion people, this number put into perspective is 40% of the world population. The five countries combined GDP is a staggering Amount of US$16.039 trillion, again which is 20% of the gross world product (GWP). GWP is the combined gross national product of all the countries in the world. They also have a sum of US$4 trillion in combined foreign reserves. Foreign reserves is money or other assess held by a central bank or other monetary authority so that it can pay if need be its liabilities.
What similarities do they have? Well all five countries are developing which gives them all the same ground. All these nations belong to the ‘south block’ also known as the developing block. The main objective is they act as one to promote legitimate international system, to give an example reform of the UN Security Council. They also act as ‘bridge’ between developed and developing countries. An example of this can be identified on the liberalisation of agricultural subsidies in developed countries. One of the main objective they all share is the assistance of developing countries in trade and climate change negotiations, as well as on issues related to the export of manufacturing products. They five emerging countries also establish the BRICS Business Council. On top of all this they challenge institutions like International Monetary Fund and the World Bank.
There are many disparities with BRICS. China is the dominating country in this association. China’s political aspiration creates challenges and increases difficulty to make consensus. To boost exports china manipulates its currency, devaluation of yuan. There are many concerns about the security issues as they maintain a low profile about it. With Brazil, India and South Africa being democratic countries while Russia and China are authoritarian regimes. Also Russia, Brazil and South Africa export different commodities, while China exports manufactured goods and India exports services.
BRICS face many challenges. After the US election 2016, currency depreciation affects these countries. Due to the Chinese stock exchange crash, which data showed that China’s economy was slowing down, which triggered fear among investors and prompted sell offs. Also in recent years there has been a slowdown in global demand which has slowed down the growth of the countries. Two main initiatives taken by the BRICS is the New Development Bank (NDB) and the BRICS currency reserve arrangement (CRA). The NDB is set up for infrastructure lending and focuses on renewable energy. It has made an initial set of project loans in all five members countries. The CRA consists of $100 billion, this for members to short term liquidity to ride over external crises.
To conclude BRICS play an important role in the economy. Like Jim O’Neill’s point that the world is changing. Experts believe they will be the world’s superpower by 2050.