Role of BRICS in world economy

What is BRICS?

The abbreviation BRICS is derived from the first letters of the member countries: Brazil, Russia, India, China, South Africa. 

BRICS is an interstate grouping of Brazil, Russia, India, China, and South Africa, and from 1 January 2024, the grouping also includes 5 new countries: Saudi Arabia, United Arab Emirates (UAE), Iran, Egypt, and Ethiopia. The BRICS plays a key role in the development of a multipolar world, seeking to promote the development of the economies of its member countries.

Is BRICS the organisation?

Although BRICS is not an organisation with a strict legal structure, the group functions effectively through regular summits and forums where leaders discuss key issues of the global economy, security and environment. BRICS is a platform for interaction between countries with fast-growing and large economies seeking to increase their influence on the world stage.

Vladimir Putin on 11 July addressing the participants of the association's parliamentary forum said:

"I am convinced that acting together, united, we will be able to achieve maximum realisation of the economic, investment, technological and human potential of our countries. We will strengthen the constructive influence of the BRICS on global processes. Make the world we live in a safer and much more harmonious place"

Vladimir Putin Russian President

BRICS Development Bank: key financial instrument

One of the most significant financial instruments of the BRICS is the New Development Bank (NDB), founded in 2014. The bank aims to support infrastructure and sustainable projects in BRICS countries and other emerging economies.

NDB's focus areas:

• clean energy and energy efficiency;

• transport infrastructure;

• water and sanitation;

• digital infrastructure;

• environmental protection;

• social infrastructure.

Nikolay Yakushev, a researcher at the Vologda Research Centre of the Russian Academy of Sciences, in an exclusive commentary for TV BRICS, noted that the New Development Bank (NDB) is an important linking multilateral organisation in the international arena. The importance of the New Development Bank (NDB), both primarily for the BRICS countries and for the entire world economy is related to complementing the existing efforts of multilateral and regional financial institutions for global growth and development.

The Role of the NDB in the global financial system

One of the unique features of the NDB is the possibility of providing loans in local currencies of member countries.

Nikolay Yakushev notes that the New Development Bank (NDB), taking into account the economic, social and institutional dimensions in the global economy, is aimed at concrete actions in the implementation of projects that as a result contribute to the favourable development of territories in combination with equal opportunities.

In the global financial system, the role of the New Development Bank (NDB) is quite significant in strengthening local currency financing issues. This creates a kind of financial framework and allows strengthening the role of the BRICS countries in the global financial system. In addition, the New Development Bank's (NDB) sustainable financing policy framework governs the Bank's issuance of green, social and sustainable debt instruments. There are also all possible prospects for the NDB to participate in the creation of a digital settlement system, the expert said.

BRICS influence on the global economy

Vladimir Putin, in his speech on the occasion of the beginning of Russia's BRICS chairmanship, emphasised that the key priorities for 2024 are strengthening economic cooperation, the use of national currencies in trade and the development of financial ties between countries.

The economic power of the BRICS member countries is growing significantly, and according to the World Bank, the BRICS share of global GDP in purchasing power parity terms reached a record 35.7 per cent in 2023. 

Chinese Foreign Minister Wang Yi, at the BRICS Foreign Ministers' Meeting in September 2024, said the BRICS countries should continue to push forward the development and reform of the global financial architecture. Wang Yi emphasised the need to support cooperation in sustainable development and technology to promote high growth standards among member countries.

"As leading members of the Global South, we BRICS countries should pursue our own success while promoting the greater good, and make our contribution to an equal and orderly multipolar world and a universally beneficial and inclusive economic globalisation"

Wang Yi Chinese Foreign Minister

New opportunities for investment

Russian President Vladimir Putin emphasised that the unification creates conditions for a new global financial system that will take into account the interests of all countries.

The new BRICS Development Bank is a vivid example of such an initiative. Its credit programmes give member countries the opportunity to implement major projects, which contributes to the development of infrastructure and stimulates economic growth.

"Strengthening trade and economic ties of the BRICS countries with other emerging markets has quite understandable prospects. Here we are talking about both basic commodities and medium and high value-added products. Of particular importance in strengthening trade and economic relations between the BRICS countries and other emerging markets are the issues of ensuring improved food security and mutual interests in the field of end-to-end digital technologies for civilian purposes"

Nikolay Yakushev International Trade Expert

Impact on international trade flows

China and India, as the largest BRICS countries, are actively developing economic ties within the association. This creates new trade routes, which strengthens the position of developing countries and contributes to global trade diversification. As Chinese President Xi Jinping noted at the 5th BRICS Summit in Johannesburg, South Africa, BRICS plays an important role in changing the global economic architecture.

"BRICS is an important force in shaping the international landscape. We choose our development paths independently, jointly defend our right to development, and march in tandem towards modernisation"

Xi Jinping Chinese President

Thus, the role of BRICS in the global economy continues to grow. Experts say that with the expansion of the association and the strengthening of financial mechanisms such as the New Development Bank, BRICS is becoming an important force on the world stage.

Photo: the image was generated by a neural network