Display mode (Doesn't show in master page preview)

25 Oct 2024

Econ Digest

The BRICS Summit 2024 reflects the bloc’s greater role in the coming years

คะแนนเฉลี่ย

The BRICS Summit 2024, held in Kazan, Russia, during October 22-24, 2024, issued the “Kazan Declaration” with the following key points:

The Summit decided to admit 13 new partner countries. Although they are not yet full members, this will open up opportunities for greater cooperation in various areas such as trade, investment, infrastructure development, and political positioning. The 13 new partner countries include 4 ASEAN countries of Thailand, Malaysia, Indonesia and Vietnam, and 9 other countries of Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Nigeria, Turkey, Uganda, and Uzbekistan. The original member countries are Brazil, Russia, India, China and South Africa, while the new member countries that have officially joined the bloc in early 2024 are Egypt, Ethiopia, Iran, and the United Arab Emirates.

However, the status of new member countries differs from that of full members in terms of voting rights in determining economic and financial policy direction. They will have limited access to financial aid from the Contingency Reserve Arrangement (CRA), but are able to benefit from loans from the New Development Bank (NDB) or the BRICS Bank.

The alliance expansion has increased the importance of the BRICS in terms of economic size, population size, trade and the holding of global energy resources. Together with its new member countries and partners, the BRICS now has 22 member countries, representing 58% of the world’s population. However, in terms of economic size, the Group of Seven (G7) still has the largest economy, accounting for 44% of total world GDP, while the combined economy of the BRICS is 31% of total world GDP.

The main points from this summit focused on the development of alternative financial infrastructure, with details as follows:

•    The promotion of the use of local currencies for financial transactions between the BRICS members and their trading partners. In 2022, the proportion of trade among the BRICS countries has increased to 15% from 12% in 2014, while the use of the RMB has also increased, both for the payment of goods between China and its trading partners and for the payment of goods through third countries such as India using the RMB to pay for oil imports from Russia. As a result, the RMB’s share in international trade payments has increased to 5.95% of global payments as of August 2024 from 1.9% in 2021. However, the US dollar remains the most used currency for payments, accounting for 84% of total payments (reported by SWIFT).
•    The development of alternative international payment systems. BRICS Pay, an international payment platform using the DCMS (Decentralized Cross-border message system) is currently under development, with a decentralized structure that uses blockchain technology to transmit information quickly and cost-effectively.
•    The creation of a grain exchange, or the BRICS Grain Exchange, for direct trade among member countries. It aims to reduce reliance on the role of middlemen, as the 9 BRICS member countries play an important role as grain producers, accounting for 42% of total world grain production and accounting for 40% of total world grain consumption. The BRICS Grain Exchange will initially start with grain trading before expanding to trade oil, natural gas and metal.

In summary, as the BRICS expands its partnerships, its role in shaping the global economy becomes more prominent. Trade among the bloc’s member countries is also likely to increase, reflected through trade figures and the preparation of payment infrastructure. However, amid the increasingly polarized economic blocs, many member nations are striving to find a balance in maintaining strategic relationships between the poles of power for their own economic benefits in the long-run.

Scan QR Code


QR Code

Annotation

This research paper is published for general public. It is made up of various sources. Trustworthy, but the company can not authenticate. reliability The information may be changed at any time without prior notice. Data users need to be careful about the use of information. The Company will not be liable to any user or person for any damages arising from such use. The information in this report does not constitute an offer. Or advice on business decisions Anyhow.

Econ Digest

BRICS