The BRICS+ grouping of nations like India, China, and Russia is rapidly increasing its share in global merchandise exports and imports and is expected to surpass G7 group by 2026, EY India said in its latest edition of EY Economy Watch.
The share of the BRICS+ group in global merchandise exports has increased from 10.7 per cent in 2000 to 23.3 per cent in 2023, an increase of 12.6 percentage points. On the other hand, the share of the G7 group in global exports has fallen by a margin of 16.2 percentage points from 45.1 per cent to 28.9 per cent over the same period.
Rest of world's merchandise export
The share of the rest of the world has largely remained stable increasing only marginally from 44.2 per cent to 47.9 per cent during this period.
This implies that largely it is the BRICS+ group which has replaced the G7 group in terms of share in global merchandise exports, the report said. A similar pattern is visible in the case of share in merchandise imports.
While the share of the BRICS+ group has increased from 7.2 per cent in 2000 to 18.9 per cent in 2023, that of the G7 group has fallen from 49.8 per cent to 33.7 per cent over the period 2000 to 2023. Once again, the share of the rest of the world has largely remained stable, increasing marginally from 43.0 per cent to 47.4 per cent.
Progressive increase in size of economies of BRICS+
"The importance of the BRICS+ group of countries has progressively been increasing in terms of size of economy and in terms of their share in world exports and imports. The BRICS+ group is likely to compete as well as cooperate with the G7 group for determining world economic policies," it said.
In the context of current geopolitical tensions, the BRICS+ group is making a concerted effort to coordinate their policies, which may eventually translate into a reduction in the dominance of a) the US dollar as the currency of choice for global trade and foreign exchange reserves, b) the use of SWIFT as a global trade platform, and c) that of western economies in technological leadership.
D K Srivastava, Chief Policy Advisor, EY India and member of the 16th Finance Commission Advisory Council, said, "Given the present trends and the likelihood of several new members joining the BRICS+ group being strong, the share of BRICS+ in global merchandise exports can overtake that of the G7 group by 2026.".
G7 lead in question as BRICS+ share in World GDP increases
The lead of the G7 in managing global economic affairs is likely to come into question as the importance of the BRICS+ group in terms of their share in global population, world GDP, and world trade increases.
Central to this transformation are India and China, two key members of the BRICS+ alliance. In 2023, they ranked third and first globally in terms of purchasing power parity (PPP). Both countries are projected to retain these positions by 2030.
Chinese Contribution to BRICS+
China's contribution to BRICS+ exports has surged dramatically, increasing from 36.1 per cent in 2000 to 62.5 per cent in 2023. India has also made significant strides, contributing 7.9 per cent to BRICS+ exports in 2023.
The EY analysis further underscores the increasing importance of high-tech exports from BRICS+ countries. The group's share of global high-tech exports has risen significantly, from just 5.0 per cent in 2000 to 32.8 per cent in 2022. This shift reflects a strategic move towards technology-intensive products, positioning BRICS+ nations as vital players in the global high-tech market.
Currencies of the BRICS+ national gaining traction
In addition to trade dynamics, the currencies of BRICS+ nations are gaining traction in the global economy.
"The Yuan has remained stable, with slight appreciation, while the Indian rupee has faced depreciation, particularly since 2018," it said.
Notably, the share of the US dollar as a global reserve currency has declined from 71.5 per cent in 2000 to 58.2 per cent in 2024, signalling a potential shift towards a more multipolar currency framework.
BRICS+ may dominate G7 and US dollar
"As geopolitical tensions continue, the coordinated policies among BRICS+ members may challenge the established dominance of the G7 and the US dollar, paving the way for a new multipolar global economic landscape..
"In fact, the BRICS+ group is establishing a platform for conducting international trade and investment transactions, which could become a low-cost alternative to the existing SWIFT platform. The group is also developing a trade and reserve currency, backed by gold and other select commodities," adds Srivastava.
