BRICS is an acronym invented by Goldman Sachs economist Jim O’Neill for major emerging national economies: Brazil, Russia, India, China, and South Africa. Together they represent about 42% of the world population, 30% of the territory, and 18% of the global trade. They started in 2001 as BRIC, whereas South Africa was added in 2010. Since 2009 the BRICS nation-states have met annually at formal summits, the most recent 12th BRICS summit was held virtually on November, 17th last year due to the pandemic outbreak.
Back in 2001, Jim O’Neill claimed that the four BRIC economies would be dominating the world economy by 2050. Brazil, Russia, India, China, and South Africa have been among the world’s fastest-growing economies for years. The reasons are low labour costs and undeniable wealth in terms of natural resources. In 2019, the GDP of the BRICS states amounted to approximately $46.22 billion, having over 24% of the global GDP.
New Development Bank
In 2014 the group established the New Development Bank with a headquarter in Shanghai. So far, the bank has been lending up to $34 billion annually. In May 2020, NDB approved a $1 billion Emergency Assistance Program Loan to India; later in June another $1 billion to the Republic of South Africa; and in July $1 billion of assistance to Brazil. The initial purpose was to finance infrastructure and sustainable development projects in the BRICS countries, complementing the existing efforts of multilateral and regional financial institutions.
A political coherence?
It’s important to note that neither Jim O’Neill nor anybody else expected BRICS states to merge in a political alliance (like the EU). On the contrary, BRICS were expected to form a powerful economic bloc. Nonetheless, there were precedents in history to consider the BRICS countries as a political alliance.
Brazil, Russia, India, China, and South Africa regularly attend summits together and often consider each other’s interests. For instance, in 2011 all BRICS countries were on the UN Security Council which coincided with the outbreak of violence in Syria. The way China and Russia vetoed the first European drafted resolution, while the other three countries abstained, produced reasoning of an emerging political alliance. The claim was later supported when China and Russia vetoed the second draft of the resolution. However, there is a little talk about BRICS nowadays, at least not in terms of global domination.
After the global financial crisis and the oil price collapse
Since Jim O’Neill’s claim, numerous BRICS-themed funds were established; but there were always sceptics. In fact, growth in the BRICS economies unsurprisingly slowed down after the global financial crisis and the oil price collapse in 2014. By 2015, the BRICS acronym no longer looked attractive for investments, and many funds aimed at the BRICS economies either shut down or merged with other investment vehicles. Goldman itself merged the BRICS focused investment fund in 2015, reporting 21% of loss in five years.
Outstanding China
It is also worth mentioning that China outruns the other BRICS members’ economies in both, growth and political strength, putting it onto a different stage. Brazil or South Africa are no match for China’s unprecedented economic growth. Moreover, China is also a part of a more prolific economic bloc, the Regional Comprehensive Economic Partnership (RCEP). After the outbreak of the pandemic, which resulted into a global economic shock, China may be the only out of the five members that didn’t experience a major economic slowdown; however, its results will certainly be smaller than in 2019. Here is our expert’ opinion the post–covid economy of Brazil.
BRICS’ possible future development
As the economic and geopolitical climate has shifted, the notion about the possible global dominance of BRICS states has been challenged multiple times. Among the arguments is the notion that the raw materials of China, Russia, and South Africa are limitless. The heavily used resources such as fossil fuel or uranium, firstly, are not infinitive, secondly, do not comply with the global development trend.
BRICS acronym is now used as a more generic term; i.e., Columbia University established the BRICLab, where students examine member states’ foreign, domestic, and financial policies. Though the BRICS grouping is aware of the collective potential in both economic and political terms (for example developing cybersecurity frameworks or discussing counter-terrorism opportunities) the relevance of the BRICS as a coherent economic grouping increasingly weakens.
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