A gathering of prominent world leaders is currently taking place at the BRICS summit in Johannesburg, South Africa. BRICS is a coalition of five countries with emerging economies that aims to establish their own global economic and trade systems. One of the key topics of discussion at the summit is the creation of a new currency. Many other countries have expressed interest in joining BRICS, but what exactly is BRICS?
The acronym BRICS, originally known as BRIC, was coined in 2001 by Goldman Sachs analyst Jim O’Neill. In a paper on emerging economies, O’Neill highlighted the GDP growth of Brazil, Russia, India, and China (the countries that make up BRIC) surpassing that of the G7 countries, which consist of advanced economies such as the U.S., Canada, France, Germany, Italy, Japan, and the U.K.
At the end of 2000, the BRIC countries accounted for approximately 23.3% of global GDP. O’Neill predicted that their GDP would continue to increase and proposed the inclusion of BRIC representatives in the G7 group. In 2006, the four original countries formed an informal alliance to contribute to the world economy, and in 2011, South Africa joined the group, resulting in the acronym changing to BRICS.
In 2023, BRICS surpassed the G7 countries in terms of global GDP contribution, accounting for nearly one-third of the world’s economic activity. The annual BRICS summit brings together leaders from these countries, with this year’s summit in Johannesburg expected to be the largest, with 69 leaders in attendance.
The group’s objective is to reshape the political and economic landscape in a way that benefits its member countries. To achieve this, they have established the BRICS Business Council, the Contingent Reserve Agreement for short-term liquidity support, and the New Development Bank to fund development projects within BRICS countries.
The upcoming summit, scheduled for August 22-24, will focus on reducing global reliance on the U.S. dollar. BRICS countries aspire to create new economic and trade systems separate from the U.S.-led Western systems. They are discussing de-dollarization and aiming to promote the use of national currencies in international trade. The U.S. dollar’s influence on other currencies has prompted BRICS to explore ways to expand trade among their own countries, thereby reducing dependence on the dollar.
Russia and China, in particular, are eager to diminish America’s dominance in the world economy. The BRICS New Development Bank is searching for alternatives to internationally traded currencies. While the group has considered the possibility of creating its own currency, it is not on the agenda for the upcoming summit.
Over 40 countries have expressed their desire to join BRICS, with 22 submitting formal applications. This growing interest is a testament to the increasing influence of BRICS in the international arena and its potential to shape the future of global finance. Countries such as Iran, Argentina, Saudi Arabia, United Arab Emirates, Kazakhstan, Bolivia, Indonesia, Egypt, Ethiopia, Cuba, Algeria, Democratic Republic of Congo, Comoros, and Gabon are among those interested in joining BRICS.
These countries hope that by becoming members, they will benefit economically in comparison to the current Western economic and trade model. The BRICS summit serves as a platform for these discussions and potential collaborations.
In conclusion, the BRICS summit brings together world leaders from countries with emerging economies to discuss and implement their own global economic and trade systems. Through the establishment of various institutions and initiatives, BRICS aims to reshape the international economic landscape. The group is currently exploring ways to reduce reliance on the U.S. dollar and promote the use of national currencies in international trade. Additionally, many countries have expressed interest in joining BRICS, recognizing the potential economic benefits it offers as an alternative to the existing Western model.
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