What is BRICS system and its purpose?
BRICS is an acronym for five leading nations-Brazil, Russia, India, China, and South Africa. It wasn’t until 2010 that South Africa joined the group, and the Big Four became known as BRICS. South Africa became a BRIC nation following a formal invitation from China and the other BRIC members.
British economist Jim O’Neill coined the term “BRIC” while working at Goldman Sachs. In 2001, O’Neill anticipated that the four countries would expand quickly and eventually apply pressure to the G7’s economic dominance.
BRICS are trying to pattern themselves as an alternative to the G7: Germany, France, the United Kingdom, Italy, Japan, Canada, and the US. The UAE, Turkey, Argentina, Bangladesh, and Egypt have joined the BRICS New Development Bank. There are many other nations prepared to follow suit.
Evolution of BRICS Members
Some predicted that by 2050 these countries would monopolize the global supply of manufactured goods, services, and raw materials. Of course, more people believed China and India would take control of the international market for manufactured goods and services. Others were hoping Russia and Brazil would be the largest raw material suppliers.
Brazil, South Africa, and Russia’s economies all experienced economic stagnation previously. India’s gross domestic product increased from $1.7 trillion to $3.1 trillion, but China’s boost outpaced it. With China’s GDP increasing from $6 trillion in 2010 to nearly $18 trillion in 2021, but let’s take a closer look at the relevant countries.
Brazil is rich in natural resources and South America’s largest economy, with a large population to support its workforce. When Brazil was initially selected as a BRIC, its economy had significant potential across the agricultural, industrial, and service sectors. Then COVID-19 struck while Brazil was already healing from an economic crisis. Still, the country continued to rebuild despite the pandemic and a history-making recession.
According to the World Bank, as a result of the 2008 financial crisis, the Russian Federation’s gross domestic product dropped to -7.8%, and its economy virtually collapsed.
Although it bounced back, geopolitical delays and a sinister reputation for corruption have pushed Russia to the outskirts of international investment. It is entirely up to you whether you invest in Russia. For international investors looking for massive returns, Russia may present difficulties.
Many of these difficulties grew significantly in 2022 as the political and economic effects of a prolonged discord in Ukraine affected the Russian economy and its petroleum exports.
You may be surprised to know that the middle-class community in India is broader than the middle-class population in the United States. India and Brazil have multi-trillion-dollar economies and are members of BRICS. India survived the Great Recession and is recovering nicely from the COVID-19 crisis. In 2021, the economy grew by 8.7%.
China is no longer considered an emerging market. It has demonstrated its growth and power with the expectation that China would make up over 19% of the global gross domestic product (GDP) in 2021 and surpass 20% by 2025. Only China has experienced consistent and significant growth among the five members.
South Africa had a tough time. In 2019, its real GDP growth was only 0.2%. Then the COVID-19 pandemic struck, causing an 8.2% plunge in GDP for 2020. The GDP anticipated an increase of 1.8% and 1.3% in 2022 and 2023, respectively, following a substantial rebound in 2021.
As a participant of the Forex and or cryptocurrency markets, it is important to monitor and note all major developments within the BRICS system that may influence price action within any of the aforementioned markets.