Could bigger BRICS bloc be a global match for G7?

South China Morning Post says that the new members of the China-led group will add to its economic clout but that is unlikely to translate into political heft any time soon. Caliber.Az reprints the article.

The expansion of the BRICS bloc could add to the group’s economic sway but is unlikely to match the heft of the G7 given the gaps in structural strength and paucity of political unity, according to analysts.

The group comprising Brazil, Russia, India, China and South Africa – announced on Thursday that six more countries – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates – had been invited to become full members on January 1.

The bloc was not meant to rival the United States and the Group of Seven wealthy economies, Brazilian President Luiz Inacio Lula da Silva said, but the expansion did invite comparisons.

In the past 14 years, BRICS has grown from an investment-related acronym to a political platform for intergovernmental cooperation with ambitions to give the Global South more influence in world affairs.

By 2020, the five member states had already overtaken the G7 countries in terms of gross domestic product adjusted by purchasing power parity, according to International Monetary Fund data. In these terms, the enlarged BRICS is projected to collectively account for 36.9 per cent of global GDP this year, rising to 38.6 per cent in 2028.

Meanwhile, the adjusted combined output of the seven advanced economies – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – is expected to fall from 29.9 per cent this year to 27.8 per cent in five years.

But the expanded BRICS still largely trails the G7 in terms of per capita GDP, and only the UAE ranks in the upper-middle range when compared to the group of advanced economies, based on IMF data.

And in terms of nominal GDP evaluated by present prices, the economic size of the G7 will still be almost 150 per cent of that of the expanded BRICS this year, based on IMF data.

Still, the weight of the expanded BRICS in the world economy is expected to rise in the coming years while the G7’s will decline.

The G7’s share of global GDP will fall from 43.5 per cent this year to 41.1 per cent in 2028, while the 11-member-version BRICS will account for 29.1 per cent of GDP this year to 31.4 per cent in five years’ time, based on IMF data.

Nevertheless, BRICS faces uncertainties. China, its biggest member, is confronting a slowdown, an ageing and shrinking population, mounting youth joblessness, sluggish consumer demand, weak investor expectations and a property market slump.

Kung Chan, founder of the Beijing-headquartered multinational independent think tank Anbound, said BRICS’ control over resources – essential for geopolitical competition – was fragmented and the bloc still did not have a global central position comparable to the G7.

“Economic size is merely a mathematical concept but not real power,” he said.

“The role of the BRICS countries as a challenger to the global order is valid, but they are unlikely to be a competitor to the G7.”

Brian Hart, a fellow with the China Power Project at the Centre for Strategic and International Studies, said the expansion of BRICS would be a double-edged sword.

The addition of new members would increase the group’s economic heft and make the group more representative of the broader Global South but it would also make consensus-building even more difficult, he said.

Hart said the five major emerging economies had not been able to translate their collective economic heft into a strong political counterweight to the G7.

“The key problem for BRICS is their lack of political unity,” he said. “While they share a collective identity as large developing countries, the BRICS countries have very disparate political systems.”

And while BRICS had established its own financial institution – the New Development Bank – it had limited influence compared to the sway of global bodies like the IMF and World Bank, Hart said.

Bonnie Glaser, director of the Indo-Pacific programme at the German Marshall Fund in the US, agreed on the lack of unity within BRICS, saying she expected that expanding the membership would likely lead BRICS to agree on “fewer issues, not more”.

“I’m sceptical that BRICS will ever be able to reshape the world order,” she said.

Glaser said the G7 countries shared values and had common perspectives on many issues including on the international order and important national security challenges, while the current five BRICS members do not have much in common.

Wang Yiwei, a professor of international relations at Renmin University in Beijing, said that comparing BRICS with the G7 stemmed from a Western mindset of “us and others”.

Nevertheless, “the structural power [of BRICS] is still far from being comparable to that of the West” and trade and investment between the BRICS countries paled in comparison to their commercial ties with the West, Wang said.

He said an example of the structural power was the US dollar’s “hegemony position” in the global payment, reserve and trading systems, which was the result of years-long cultivation and would not be easily changed.

“The world cannot always be dominated by the West, but it will be a long journey to change structurally and conceptually,” he said.