Comparing economic indicators for countries associated with BRICS and the G7

Comparing economic indicators for countries associated with BRICS and the G7

    Saturday, May 20, 2023   No comments

Economic data showed that "the BRICS economy has surpassed that of the Group of Seven."

The data indicated that "the Group of Seven, 30 years ago, was 2.5 times larger than the BRICS group, in terms of gross domestic product," while now, "the BRICS have surpassed the former colonial powers that make up the Group of Seven."

Economic analysts pointed out that this data may "answer what these powers are trying to stop, namely China, because it constitutes the largest part of the BRICS economy," as China is equivalent in terms of gross domestic product in US dollars to 6 countries from the Group of Seven.

In other words, China's GDP is equal to that of Germany, Japan, the United Kingdom, France, Italy and Canada combined.

In other interesting data on the share of international powers in global GDP since 1980, the third chart below shows that the United States has been on its share since 1980: no loss, no gain.

The data also shows that developing countries are also unchanged, while Europe, the Organization for Co-operation and Development and developed countries, except for the United States, are the biggest losers. As for China, its share has grown tenfold, to become the biggest gainer.

Earlier, Joseph W. Sullivan, senior advisor to the "Lindsey Group" and economist at the White House Council of Economic Advisers, said during the administration of former US President Donald Trump, that "the BRICS currency could shake the dominance of the dollar, and the moment of de-dollarization may have arrived." finally".

In his interview with the American newspaper "Foreign Policy", Sullivan added that in New Delhi, Alexander Babakov, deputy speaker of the Russian State Duma, said that "Russia is now leading the development of a new currency, which will be used for cross-border trade by the" BRICS "Brazil, Russia, India and China." and South Africa".

And based on the economy, at least, the prospects for the success of the currency issued by the “BRICS” group are contained, according to “Force Policy”, and although many practical questions remain unanswered, such a currency could expel the US dollar as a reserve currency for its members. "BRICS", and shook the position of the dollar from its throne.

Naldi Pandor, South African Foreign Minister, has said that the creation of a new BRICS currency will be a major item on the agenda of the upcoming "BRICS" summit, in Johannesburg on August 22.

Countries that have applied to join the BRICS:

At the moment, BRICS consists of Brazil, Russia, India, China, and South Africa.

Applications to join came from:

— Algiers,

— Argentina,

— Afghanistan,

— Bangladesh,

— Bahrain,

— Belarus,

— Venezuela,

— Egypt,

— Zimbabwe,

— Indonesia,

— Iran,

— Kazakhstan,

— Mexico,

— Nigeria,

— Nicaragua,

— UAE,

— Pakistan,

— Saudi Arabia,

— Senegal,

— Syria,

— Sudan,

— Thailand,

— Tunisia,

— Türkiye, and

— Uruguay.

*****

 Monetary Fund and the World Bank

Currently, the “BRICS” group occupies an important position in the global scene, as its member states enjoy increasing economic power and international influence. The group enhances cooperation and trade exchange between its member states, and seeks to increase its voice and influence in global affairs.

  The BRICS group is facing challenges in promoting economic and political cooperation among member states, but it is a strong alternative to the traditional global economic system.

According to the latest widespread data, the economic assessment indicates the superiority of the “BRICS” group over the Group of Seven, as the group includes Brazil, Russia, India, China and South Africa, and these member states are emerging economic powers that play a vital role in the global economy. The seven are from Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, as well as the European Union.

It is known that the “BRICS” group is witnessing continuous expansion, as Bangladesh, Egypt and the United Arab Emirates have joined the New Development Bank of the “BRICS” group, and there are several other countries preparing to join as well. This shift confirms the growth of the strength and influence of the “BRICS” group in the global arena, and may pose a challenge to the Group of Seven in the future.

And indications have emerged portending important developments about the future of the “BRICS”, which is the possibility of Mexico joining it, which constitutes a large part of the North American trade bloc (CUSMA). The United States to fair and equal trade competition with global economies on the American frontier.

Currently, the five BRICS countries contribute about 31.5% of global GDP, while the share of the Group of Seven countries drops to 30%. The BRICS countries are expected to exceed 50% of global GDP by 2030, and the proposed expansion will strongly advance this goal.

Previously, 30 years ago, the G7 was 2.5 times larger than the BRICS countries in terms of GDP. However, current data indicates that the BRICS countries have outperformed the former colonial powers of the Group of Seven.

Indeed, China's GDP surpassed that of the United States in 2015 when the economies were compared against a purchasing parity benchmark.

On the other hand, the interests of the BRICS countries are not only limited to trade, but are also rooted in the political belief that the world should be multipolar.

The BRICS group encourages the idea of a global system that includes several political and economic poles, in which its interests are better guaranteed through a balance of power and a multiplicity of partners, rather than a unipolar system in which the United States dominates.

And in 2021, the BRICS countries played an effective role in strengthening and reforming the global multilateral system, as they adopted a joint statement aimed at strengthening and reforming the global system.

  Among the aspects called for in this statement was the need to reform the current Security Council system in the United Nations to be more representative and in line with current global realities. The statement also dealt with many other issues of common concern to the BRICS countries.

According to economic data, China is particularly outperforming in its GDP. China's GDP is equal to a group of countries in the Group of Seven, including Germany, Japan, the United Kingdom, France, Italy, and Canada.

These data reflect the remarkable economic success of the “BRICS” countries, and indicate that China has a major role in achieving this success thanks to the large size of its economy within the BRICS group. China's strong economy enhances the position of the BRICS" as a powerful group and its influence on the global economy is increasing significantly.

However, it should be noted that China's economic supremacy does not necessarily mean that it has completely surpassed the G7 in all economic and political aspects. The Group of Seven still maintains its influence and its important role in international relations and world trade.

China's trade value with three of the four potential BRICS countries exceeds 100 billion US dollars, and its sales reach 416 billion US dollars. Indeed, China's trade alone accounts for more than 90% of the BRICS countries' total trade value in dollar terms. This is attributed to China's economic dominance and its impressive rate of growth.

According to the Chinese government, foreign trade between China and BRICS countries registered a year-on-year growth of 12.1% in the first five months of this year, amounting to about 195.71 billion US dollars. This rate is 3.8 percentage points higher than China's overall growth rate in foreign trade over the same period.

Russia also plays an important and active role inside and outside the BRICS group, with a turnover of about $164 billion. This can be explained by the fact that the BRICS countries are a group that is highly dependent on energy, as their population constitutes more than 40% of the world's population. Thus, net power exporters have a strong position. Russia's strength is based in particular as an energy producer for the "BRICS" countries.

As for India, its trade has recorded a value of 142 billion US dollars among the “BRICS” countries. India enjoys a more balanced trade outcome among the member states, trading equally with all members except China and South Africa, and especially for members with a large Indian diaspora.

And Brazil, it is noticeable that its intra-trade is directed towards Asia, especially China and India, instead of trade with Africa or Russia. This shift may indicate the importance of Asia in Brazil's economic relations and reflects the important role played by China in particular. This means that Asia is an important market for Brazilian products, and may also reflect the shift in Brazil's economic and trade orientation towards emerging markets and the rising economic powers of Asia.

It is noted that there is active trade between South Africa and other "BRICS" countries. Although the South African economy is considered the smallest in size among the “BRICS” partners, trade between India, South Africa, China and South Africa exceeds the trade between India and Russia or Russia and Brazil, and this indicates the existence of important economic relations between South Africa and the rest of the “BRICS” partners . This strong direction of trade reflects South Africa's preference to strengthen relations with the "BRICS" countries and take advantage of the trade and investment opportunities available in these countries.

Ultimately, according to Joseph W. Sullivan, former economist in the administration of US President Donald Trump, the creation of a new BRICS currency is a threat to the dominance of the US dollar and may contribute to the transformation of the world order. He also referred to Russia's efforts to develop a new currency that will be used for trade between the BRICS countries, which include Brazil, Russia, India, China and South Africa.

It is believed that the creation of a new BRICS currency may challenge the US dollar as a reserve currency and may shake its position as a strong global currency. This topic is expected to be part of the agenda of the upcoming BRICS summit in Johannesburg. This step may reflect the desire of some countries to achieve independence and abandon the heavy dependence on the US dollar in international trade and financial relations.

In conclusion, the BRICS countries are superior to the Group of Seven in many important economic indicators. This superiority raises questions about the transformation of economic and geopolitical power in the world? Are we about to see massive shifts in the global economic system? Will the hegemony of traditional Western countries recede and emerging countries will regain their global status?

These results may open the door to questions about the future of reserve currencies and the role of the US dollar as a strong global currency. Could a new BRICS currency emerge that would challenge and shake the US dollar? Will the system of global economic relations be radically modified?

These exciting developments call us to carefully follow the developments of the global economy and monitor the shifts in economic forces.