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5 BRICS nations contributing more than industrialised G7

  • Category
    Economy
  • Published
    7th Apr, 2023

Context

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

BRICS

G7

The BRICS countries comprise Brazil, Russia, India, China, and South Africa, and represent the largest developing economies.

The G7 are the largest industrialised economies and consist of the US, the UK, Germany, France, Japan, Italy, and Canada.

The G7 countries have historically been among the largest economies in the world.

 

The BRICS nations — especially China and India — have been and continue to be the most populous.

  • The G7 nations account for about 10 per cent of the world’s population.
  • Just India and China, with 140-141 crore people each, together make up about 35 per cent.

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?

Persistent challenges (for BRICS)

  • Lack of soft power and military power (China, for example, can’t challenge US naval power in their coastal waters)
  • Slowing growth
  • Lack of robust internal institutions
  • 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.

Organisational Info

About BRICS

  • Founded in: 2006
  • BRICS is a group of five major emerging economies comprising Brazil, Russia, India, China and South Africa.
  • It is pertinent to note that the countries together represent 41% of the world’s population, around 25% of global GDP and around 20% of world trade.
  • Subsidiary: New Development Bank
  • Aim: The BRICS mechanism aims to promote peace, security, development and cooperation.
  • The five nation powerful grouping has been discussing and deliberating on issues of common concern for all developing countries.
  • BRICS countries have regularly called for reform of the multilateral system in order to make it more representative and inclusive.

Group of Seven (G7)

  • It is an intergovernmental organisation that was formed in 1975.
  • The bloc meets annually to discuss issues of common interest like global economic governance, international security and energy policy.
  • The G7 countries are the UK, Canada, France, Germany, Italy, Japan and the US.
  • All the G7 countries and India are a part of G20.
  • The G7 does not have a formal charter or a secretariat. The presidency, which rotates among member countries each year, is in charge of setting the agenda. Sherpas, ministers and envoys hammer out policy initiatives before the summit.

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