BRICS challenge to pave the way for a parallel global economic order

0

South Africa will be a destination of global interest during the period between 22-24 August, the date of the 15th BRICS summit.

The BRICS members, made up of Brazil, Russia, India, China and South Africa, seek to strengthen the bloc, as part of efforts to establish a new global economic order and increase the danger to the Group of Seven.

More than 40 heads of state and government from the countries of the Global South are meeting, Tuesday, many of whom have for years condemned the Western-led international system for marginalizing them.

About 20 countries of the Global South have formally requested to join the bloc, and several other countries have expressed interest, while the group has not obtained any new acceptance since South Africa in 2010.

With the assumption of accepting new members, the group could generate about half of global production by 2040, if aspiring members such as Indonesia, the world’s largest producer of palm oil, and Saudi Arabia, the largest oil exporter, join.

This means strengthening the global influence of the alliance.

By comparison, the G7 provide about a quarter of global GDP, which effectively represents a collapse of the share of the (G7) from what it was 15 years ago, when it reached 45%.

The G7 consists of the world’s major industrial powers, the United States, Germany, Italy, Canada, Japan, France, and the United Kingdom.

Hypothetically accepting new members into the enlarged upward alliance, it would also account for nearly half of the world’s population, up from 42% currently.

This potential expansion, pioneered in large part by Chinese President Xi Jinping, and which has the backing of Russia and South Africa, is making the West more or less uneasy.

The unease is that the larger BRICS group will become a mouthpiece for China and discredit other members; While optimism in this expansion lies in the fact that it will provide a voice for emerging countries amid a divided and polarized world.

On the other hand, BRICS members face some economic weakness, especially in Brazil and South Africa, while China – the world’s second largest economy – suffers from an economic slowdown.

This weakness would reduce the chances of homogenization of members, to be able to translate economic and demographic strength into a political force that would challenge the G7.

The bloc’s politically disparate members face deep challenges at home and have stumbled time and again to forge a unified stance on global issues, from the war in Ukraine to climate and trade.

Despite the studied efforts of the BRICS alliance to find a common currency among the members, it is still a distant dream, as economies of varying strength and the rejection of the idea by other countries still stand as an obstacle to the adoption of a common currency.

The West doesn’t expect the current hype about a move towards a common currency among the BRICS countries to have a significant impact, as the biggest impact may be related to the adoption of members’ currencies in trade payments.

However, seven years after the International Monetary Fund added the Chinese currency to its basket of reserve currencies, the yuan still represents a very small share of global countries’ reserves, not exceeding 2.5%, according to fund data.

Likewise, BRICS economies fear the hypothesis of negative effects on the dollar and then on their economy.

Among the loud threats to the possibility of a deterioration of the dollar: the collapse of the gold standard, the emergence of floating exchange rates, the US current account deficit, the budget deficit, and a global financial crisis.

In addition, despite the expected great role of the New Development Bank, which is the lender established by the BRICS to become a counterweight to the IMF or the World Bank, it still faces weakness in cash liquidity.

However, despite this, emerging markets are angry at an American taking over the presidency of the World Bank and a European taking over the IMF.

Share it...

Leave a Reply

Your email address will not be published. Required fields are marked *