New Delhi, India – The share of the BRICS (Brazil, Russia, India, China, South Africa) group in the global Gross Domestic Product (GDP) is set to increase from its current 26% to 30% starting January 2024, State Bank of India (SBI) said in its report.
The growth is attributed to the inclusion of six new member countries into the BRICS organization, namely Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, which together will contribute 4%.
Currently, China is the largest contributor to the aggregate GDP of BRICS, with a staggering 70% share, followed by India at 13%, Russia at 8%, Brazil at 7%, and South Africa at 2%. This cumulative share accounts for the 26% of global GDP attributed to BRICS.
One of the most significant impacts of the new members joining BRICS will be on global oil production, which is expected to increase from 18% to 40%. This shift could potentially have a transformative effect on payment systems and price discovery in the international oil market.
The SBI research paper predicts an increase in BRICS’ share of global merchandise trade from 20% to 25%, as well as an uptick in global services trade from 12% to 15%. Their share in global foreign exchange reserves is projected to rise by 600 basis points to reach 45%.
The inclusion of these six new members will also result in the BRICS group collectively representing 46% of the world’s population by 2024.
The decision to expand the BRICS organization was made during the group’s summit in Johannesburg and is set to take effect on January 1, 2024. The developments marks a significant shift in the global economic landscape, with BRICS poised to play an even more influential role on the world stage.
The biggest impact of six new member states joining BRICS will be on the share of global oil production that will increase to 40% from the current 18%, which is expected to be the potential game changer for payment system and price discovery, the SBI note said