The BRICS alliance—comprised of Brazil, Russia, India, China, and South Africa—has been an influential group representing emerging markets with considerable sway in the global economy. In 2024, the alliance expanded, adding several new members: Argentina, Egypt, Iran, Saudi Arabia, the UAE, and Ethiopia. This expansion has sparked discussions about the group’s evolving role on the world stage and the potential economic and geopolitical shifts it might bring. In this blog, we’ll dive into what this expansion means for BRICS and how it may influence the global economy.
The Significance of BRICS and Its Expansion
BRICS initially emerged as an alliance representing large, fast-growing economies outside the Western-centric power structures like the G7. Together, these nations account for over 40% of the global population and approximately 25% of global GDP. Since its inception, BRICS has aimed to challenge Western-dominated economic frameworks, seeking to provide an alternative platform for economic and political collaboration among developing nations.
With the addition of Argentina, Egypt, Iran, Saudi Arabia, the UAE, and Ethiopia, BRICS has significantly broadened its reach. The new members add diversity and unique economic advantages, enhancing the alliance’s potential to reshape global trade patterns, diplomatic relations, and energy dynamics.
Key Implications of the New Members for the Global Economy
The expansion of BRICS brings together some of the world’s largest energy producers, fast-growing markets, and strategically located nations. Here’s how this enlarged alliance could influence the global economy:
Increased Influence Over Energy Markets
With Saudi Arabia, Iran, and the UAE as new members, BRICS now includes three of the world’s leading oil and gas producers. This addition could give BRICS greater control over energy supplies and pricing, rivaling the influence of the West in energy markets.
These countries may align on energy policies that prioritize the interests of oil-producing nations outside of Western influence, potentially reshaping global oil pricing dynamics. Additionally, energy-producing BRICS members could support joint ventures in renewable energy projects, given the global shift toward sustainable energy.
Strengthened Push for De-Dollarization
The original BRICS members had already begun exploring alternatives to the U.S. dollar for international trade, with discussions about a common BRICS currency. Adding countries like Saudi Arabia and the UAE—key players in the global financial system—could accelerate efforts toward de-dollarization.
The new members might favor using their local currencies in bilateral trade within BRICS, reducing dependency on the U.S. dollar and shifting global currency power. This move could gradually impact dollar-dominated markets, especially if oil transactions are shifted away from dollar-based pricing.
Expansion of Trade Routes and Economic Corridors
With members now spread across Africa, Asia, the Middle East, and Latin America, BRICS has the geographic reach to facilitate new trade routes. The inclusion of Egypt, a nation with the Suez Canal, could boost trade efficiency within the BRICS bloc, allowing for easier access to European, Asian, and African markets.
Ethiopia and Egypt bring further African representation, increasing trade links between Africa and other BRICS regions. Africa’s rapidly growing economies, young workforce, and natural resources make it a valuable addition to BRICS’ collective economic potential.
Boosted Infrastructure Investments and Development Initiatives
BRICS, through its New Development Bank (NDB), has provided financing for infrastructure projects and development in member countries. With more members, the NDB could see an expansion of its capital base, enabling larger and more diverse projects.
New members like Argentina and Ethiopia, which need substantial infrastructure improvements, might benefit from NDB-funded projects, potentially reducing their reliance on Western financial institutions. This increased investment can stimulate economic growth in these emerging economies and create new trade opportunities within the BRICS bloc.
Geopolitical Influence in Multilateral Institutions
BRICS’ expansion boosts its leverage in international institutions like the United Nations, the World Trade Organization, and the International Monetary Fund. The inclusion of Iran and Saudi Arabia—two countries with significant geopolitical clout—strengthens BRICS’ voice on issues like sanctions, conflict mediation, and international trade policies.
By uniting more countries outside of Western alliances, BRICS can advocate for reforms in global governance structures to reflect the needs and perspectives of emerging economies. This push could lead to a more multipolar world order, challenging the dominance of Western-led institutions.
Potential Challenges and Limitations
While BRICS’ expansion holds promise, there are challenges to aligning these diverse nations under a cohesive economic and political strategy:
- Diverse Political Agendas: The new members bring varied political systems and interests, which could complicate consensus on issues. For example, historical tensions between Saudi Arabia and Iran might pose challenges to unified energy or foreign policy stances within BRICS.
- Economic Disparities: The economic profiles of the new members differ significantly, from the resource-rich Saudi Arabia to Argentina, a nation facing economic instability. Balancing the development priorities of each member could pose a challenge for the BRICS Development Bank and other cooperative efforts.
- Western Pushback: The expanded BRICS is likely to draw increased scrutiny and pushback from Western countries, particularly the U.S., which may view the alliance as a threat to its economic and political influence. This could lead to heightened competition, including economic sanctions or diplomatic efforts to deter cooperation with BRICS.
The BRICS expansion marks a potentially transformative moment in the global economy, reflecting a shift toward a more multipolar world order. The alliance’s ability to influence energy markets, trade routes, and financial systems could recalibrate power balances that have historically favored the West.
For BRICS to realize its full potential, member nations will need to address internal differences and work collaboratively on shared goals. If successful, the expanded BRICS could offer an alternative model for international cooperation and development, reshaping global trade, finance, and diplomacy. As BRICS continues to evolve, it will undoubtedly be a critical player in the future of the global economy, challenging established norms and potentially bringing about a new era of economic and geopolitical alliances.
