The International Trade Council acknowledges the recent expansion of the BRICS group to potentially include Saudi Arabia, the United Arab Emirates, Iran, Egypt, Argentina, and Ethiopia. According to a note from S&P Global Ratings, the near-term economic impact for member countries is anticipated to be limited.
S&P Global Ratings explains that their current sovereign ratings are not expected to be altered solely due to the group's enlargement. This observation is based on the historical experience of the original BRICS members, the distinct economic and financial systems of each nation, and the minimal political cohesion observed among them. However, S&P does note that joining BRICS could offer global attention to the new members' respective agendas and possibly promote bilateral cooperation.
In terms of economic and political unity among BRICS nations, the report highlights substantial variations. For example, S&P’s foreign currency sovereign ratings among the current and prospective members range from high investment grades to 'CCC'.
The report also indicates diverse economic challenges and developmental stages among the prospective new members. Gross Domestic Product (GDP) per capita ranges significantly, from $1,220 in Ethiopia to $51,456 in the UAE.
Additionally, the economic size of one member, China, currently exceeds the combined economies of all other members. This difference could potentially impact the influence each nation has on policy-making within the group.
If the expansion materializes, the BRICS group would represent roughly 30% of the world’s GDP and about 45% of its population. While some analysts predict that this expanded bloc might serve as a counterweight to Western influence in global economics and geopolitics, it remains to be seen how these dynamics will unfold.
The International Trade Council will continue to monitor developments that impact international trade and cooperation.