More than 40 nations have reportedly lined up to join the Brics bloc of major developing economies, which accounts for more than 40% of the world’s population and about 26% of the global economy.
Formed in 2009, the group of emerging markets — Brazil, Russia, India and China, with South Africa added later — has gone from a slogan dreamed up at an investment bank to a real-world club that also controls a major development bank.
“BRIC” was coined in 2001 by economist Jim O’Neill, then at Goldman Sachs Group, to draw attention to strong growth rates in Brazil, Russia, India and China.
The rapid growth of the four nations at the time meant they had shared interests and common challenges.
The biggest concrete achievements have been financial. The countries agreed to pool $100bn of foreign currency, which they can lend to each other during emergencies.
They founded the New Development Bank — a World Bank-inspired institution that has approved more than $30bn of loans for projects like water and transport infrastructure since it began operations in 2015.
They also plan to discuss the feasibility of a common Brics currency this year.
Economically, Brazil and Russia’s natural resources and farm products make them natural partners for Chinese demand. India and China have weaker trade connections with each other, partly due to political rivalries and an acrimonious border dispute.
The biggest obstacle is that the countries have diverging interests on major political and security issues — including relations with the US — and different governing systems and ideologies.
China’s gross domestic product is more than twice the size of all four other members combined. But, India — which recently surpassed China in population — has been a counterweight.
Brics has not formally endorsed China’s big development push called the Belt and Road Initiative, partly because of India’s objection.
On the New Development Bank, there’s no dominant shareholder: Beijing agreed to the equal holdings advocated by New Delhi. The bank is headquartered in Shanghai, but has been led by an Indian and now, Brazil’s former president Dilma Rousseff.
Russia remains a Brics member despite its invasion of Ukraine in 2022. That year’s Brics leaders summit was held online, and Putin participated.
The other Brics countries have adopted a broadly neutral stance toward the war, viewing it as more of a regional issue than a global crisis.
However, the war has changed Russia’s relations with Brics institutions.
More than 40 countries have expressed an interest and, of those, 22 have formally asked to join the Brics grouping, including Argentina and “all the major Global South countries,” according to Anil Sooklal, ambassador from South Africa, said on July 20.
Saudi Arabia, Iran, Bangladesh and the United Arab Emirates are among those interested, he added.
While a nice idea two decades ago, Brics is largely irrelevant as an investment theme today due to geopolitical changes and the members’ different economic trajectories.
Except for India, the Brics have underperformed their emerging markets peers over the last five years, according to Bloomberg Intelligence.
US-led sanctions have made Russia uninvestable, and segments of China — especially technology companies — have also been sanctioned or face potential investment bans.
Brazil’s economy slowed markedly following the end of a global commodity boom about a decade ago, while South Africa’s has been subjected to years of rolling power blackouts because the state utility can’t produce enough electricity to meet demand.
Jim O’Neill said the Brics bloc of nations should expand and work to counter the dollar’s dominance.
However, given the complex political issues and economic asymmetries among Brics members, it will be difficult to launch a euro-like common currency any time soon.
South Africa will host this year’s Brics summit next month and has invited 69 global leaders to attend related events.