The BRICS bloc of developing countries achieved heavyweight status this week by expanding to cover 47% of the world’s population and 36% of the global economy.
Driving the news: The leaders of BRICS, representing Brazil, Russia, India, China, and South Africa, made a surprise announcement at their summit to extend the group’s membership to six new countries: Saudi Arabia, Egypt, Ethiopia, Argentina, and the UAE.
Why it matters: Per The Globe and Mail, Western-dominated G7 advanced economies still hold a larger share of global GDP, but the expanded BRICS bloc takes the lead when it comes to purchasing power that adjusts GDP to reflect local prices and currency values.
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The growing economic and political power of the group could help it advance on one of their (only) shared goals: Cutting their reliance on the US dollar in global trade.
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From 1999 to 2019, 96% of trade in the America’s and 74% in the Asia-Pacific region was denominated in USD, which is part of why its the world’s most valuable currency.
What’s next: BRICS could get bigger, and fast. Over 20 countries applied for membership ahead of the decision, and another 40 countries have expressed interest in joining the group.
Big picture: As the global economy becomes more divided—and nations inevitably become pressured to take sides—it may become increasingly difficult for countries to come together to address some of the world’s most hot-button issues, from technology to security.—LA