5 BRICS nations contributing more than industrialised G7

Data shows that, beginning 2020, the BRICS nations as a whole now contribute more towards global Gross Domestic Product (GDP) than the G7 industrialised nations do, in terms of purchasing power parity (PPP).

Key-highlights of IMF’s Report

• The International Monetary Fund’s (IMF) GDP data across countries over time depicts that since 1992, there has been a steady decline in the share of the G7 in global GDP, and an equally steady rise in the contributions of the BRICS nations. 
• By 2019, the contributions of the two groupings had become nearly equal, with the G7 contributing 31.5 per cent to global GDP, and the BRICS accounting for 30.7 per cent.
• It was in 2020, however, that the G7-BRICS dynamic flipped. That year, the BRICS (31.4 per cent) overtook the G7 (30 per cent).
• Expansion: The BRICS is also expanding – Bangladesh, Egypt and the UAE have all just joinedthe BRICS New Development Bank, with numerous other countries poised to do the same.

A quick comparison

What factors are responsible for the growth?

• COVID-19 Pandemic
• Russia-Ukraine War
• Macroeconomic stability
  • responsible monetary policy
  • decreased sovereign debt
  • increasing international reserves

What are the likely impacts?

• The combined economies of Brazil, Russia, India and China (BRICs) could emerge as a dominant economic block in the world.
• The growth increases the opportunities for economic and political influence in order to:
• strengthen and reform the multilateral system, including international economic organizations, to ensure that it is more inclusive, democratic and representative
• to enhance participation of developing countries and states with emerging markets in the process of international decision-making

Role of BRICS

• Change the world economic system-BRICS is actively involved in the efforts to change the world economic system by increasing the number of non-Western states in international financial institutes despite frantic opposition by the traditional distributors of world money.
• New Development Bank and Currency pool-The BRICS countries decided to create the $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion to offer an alternative to countries in the non-Western world when it comes to choosing the sources of funding for development or coping with serious economic crises.
• Alternative to West-The current crisis in Ukraine will consolidate BRICS as the group will make further efforts to become a real alternative to the West to create a real multipolar world.

Understanding Western Differences of BRICS

• Socialist Tendencies-Brazil, which represents Latin America and has strong left socialist tendencies, disagrees with the West on social issues.
• Abetting the old order-The situation in South Africa where the local communists belong to the ruling coalition while the West is accused of abetting the old order.
• Repelled by moral values-In Russia and India, people are not so much repelled by the political as by the moral values of the West.