BRICS 2.0: Opportunities and Challenges in an Expanded Coalition
- Economic Growth and Expansion: BRICS expanded in 2024, adding Saudi Arabia, UAE, Iran, Egypt, and Ethiopia, boosting its collective GDP to $30.8 trillion, representing nearly 38.5% of global GDP by 2028.
- De-dollarization and Trade: BRICS nations increasingly trade in their currencies, challenging the US dollar's dominance, with significant growth in intra-bloc trade, led by China.
- New Development Bank (NDB): The NDB finances sustainable development projects in emerging markets, offering alternatives to the World Bank, especially during economic crises.
BRICS is a coalition of some of the world’s most significant developing nations aimed at counterbalancing the political and economic dominance of Western powers in North America and Western Europe. The idea for BRICS was first introduced by Jim O’Neill, a chief economist at Goldman Sachs, in his 2001 research paper titled “Building Better Global Economic BRICs.” Although it initially began as an informal club in 2009, providing a platform for members to challenge a world order dominated by the United States and its Western allies, it was Russia that laid the foundation for the group.
The BRICS coalition consists of Brazil, Russia, India, China, and South Africa, representing rapidly growing national economies with significant influence on global economic trends. South Africa, the smallest member in terms of economic clout and population, was the first nation to join in 2010 as part of the bloc’s expansion efforts. Since its inception, the coalition has achieved notable milestones, symbolizing the increasing influence of emerging economies.
During the BRICS summit held in South Africa from August 20-24, 2023, six additional countries—Ethiopia, Egypt, Argentina, Iran, the UAE, and Saudi Arabia—were invited to join the grouping. Argentina ultimately declined due to its geopolitical circumstances, but the remaining five countries accepted membership, officially joining BRICS on January 1, 2024. With these new members, BRICS’ collective GDP is expected to increase to USD 30.8 trillion. According to the IMF, the expanded bloc is projected to account for 37.3% of the world’s GDP by 2025 and 38.5% by 2028. The bloc’s combined GDP had already reached USD 27.6 trillion in 2023, representing 31% of the global economy.
BRICS is a coalition of non-Western economies that collaborate on both economic and diplomatic objectives, despite not being a recognized organization. The goal of BRICS nations is to balance the Western viewpoint that dominates important international organizations like the UN Security Council, the Group of Seven (G7), and the World Bank.
The group’s 2024 expansion holds significant geopolitical weight. The ten BRICS countries represent almost half of the world’s population and over 25% of its economy. However, this expansion also introduces new challenges, as internal conflicts and increasing resistance from Western countries test the bloc’s cohesion. Whether BRICS can establish a more unified global voice will depend on how its members manage these conflicts.
China has taken a leading role in boosting BRICS trade. According to China’s General Administration of Customs, trade between China and other BRICS countries reached USD 3.326 trillion in 2023, a 19% increase from 2022. China’s trade with Russia amounted to USD 240 billion in 2023, up 26% from the previous year. Trade between China and India reached USD 165.6 billion in 2022, reflecting an 8.1% increase, while South Africa became China’s top trading partner in Africa, with bilateral trade totaling USD 56.74 billion in 2022, an 11% increase from the previous year.
The BRICS nations established the New Development Bank (NDB) to finance sustainable development and infrastructure projects in emerging markets. Founded as an alternative to the World Bank, the NDB has approved around USD 33 billion for 90 projects in developing countries, particularly focused on infrastructure, transportation, and water projects. During the COVID-19 pandemic, South Africa borrowed USD 1 billion from the NDB, highlighting the bank’s critical role in supporting member nations during economic crises.
Economic activities within BRICS have also begun to challenge the dominance of the US dollar, moving towards de-dollarization. BRICS nations have increasingly traded in their currencies rather than relying on the US dollar. For instance, Saudi Arabia and Turkey traded Chinese and Russian goods in rubles and yuan in 2022. India and the UAE also settled bilateral trade in their respective currencies, with New Delhi purchasing a million barrels of crude oil using Indian rupees. In December 2023, Russia’s deputy minister reported that 95% of trade between Russia and China was conducted in rubles and yuan.
Both China and Russia have advocated for BRICS expansion since 2017 to create more opportunities for emerging economies. Pakistan applied to join BRICS in 2023, aiming to leverage the bloc’s economic network for its growth. Pakistan’s potential membership would strengthen its economy and open up new trade markets. Membership would also enhance Pakistan’s regional and global standing, establish a more sustainable oil supply chain, and expand educational and cultural exchanges.
The recent expansion of BRICS presents new opportunities for emerging economies. Increased trade within the BRICS bloc offers growth prospects and pathways to sustainable development. By incorporating the natural resources of Middle Eastern and African nations, BRICS could further boost its collective GDP. Alongside economic benefits, BRICS membership fosters the exchange of knowledge, ideas, and innovations, contributing to shared prosperity. How BRICS manages internal and external pressures will determine its success in creating a balanced world order and a unified voice on the global stage.
The author is a history graduate from Government College University, Lahore.
