BRICS catches up with the G7 countries
In the wake of the global and regional crises of recent years, as the ideological and political divides between the West and the Global South deepen, the cooperation between the strongest economies has gained in importance. The economic and political weight of the Global South is growing, as evidenced by the rise of the BRICS.
BRICS catches up with the G7 countries
New Sustainable Economics

BRICS catches up with the G7 countries

Photo: AFP/Yomiuri/Masamine Kawaguchi
Attila Bácsi - Máté Ladics 20/09/2024 06:00

In the wake of the global and regional crises of recent years, as the ideological and political divides between the West and the Global South deepen, the cooperation between the strongest economies has gained in importance. The economic and political weight of the Global South is growing, as evidenced by the rise of the BRICS.

The weight of the BRICS is demonstrated by the fact that the combined GDP of its countries, measured in purchasing power parities, now exceeds that of the G7 - both blocs now account for roughly a third of global GDP. Together, the ten countries in the group account for a quarter of global GDP, two-fifths of world trade and nearly half of the world's population. The original four member states will hold 73 percent of global reserves of rare earth minerals, while China, India, Brazil and Egypt will be home to 59 percent of the global middle class.

The BRICS' strength and clearest advantage over the G7 is the pace of its economic growth. The average annual GDP growth of the BRICS member states, although flattening out at around 3 percent, is still far above that of the Western powers, which are expected to contribute a much smaller share to world economic growth. In other indicators, however, the BRICS still lag significantly behind the G7. In nominal and per capita GDP, the G7 still lead by a wide margin, and the world's richest democracies have a significant advantage in terms of foreign direct investment (FDI) inflows and outflows.

The real advantage of the BRICS as a grouping of major and middle powers compared to the G7 is that, unlike the G7, it is not just a forum but a real organisation, which simplifies the implementation of joint decisions. Its biggest steps forward have been in the area of financing for development. The New Development Bank and the Asian Infrastructure and Investment Bank, which are linked to the countries of the organisation, have provided some 71 billion USD in loans up to 2023, mainly for infrastructure, green technologies and health within the group.

Although the organisation is pushing ahead strongly, its catching-up and ambitions are hampered by its own internal challenges: unlike the much more homogeneous G7, the BRICS member countries have very diverse cultures, politics, economies and institutions, which can make unified action difficult. Several BRICS members are also geopolitical rivals, and the situation has been exacerbated by enlargement: such rivalries exist between China and India, and between Saudi Arabia and Iran. The inclusion of Iran could make BRICS even more anti-Western, reinforcing the already strong influence of Russia and China within the group. This could create an uncomfortable situation for more neutral, 'pendulum' states such as India and Brazil, which, while openly going their own way, also seek to maintain friendly relations with the West.

All in all, the BRICS group, despite its many challenges, is beginning to rise to the challenge, as illustrated by the growing interest shown by a growing number of countries disenchanted with Western institutions.

The authors are analysts at the Makronóm Institute


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