BRICS Plus and developing countries will produce majority of future GDP growth

By Rhod Mackenzie

According to a review by the Association of Russian Banks , the share of developing countries, including Russia, in global GDP will exceed 60% by 2026. This indicates a shift in the balance of power in the world economy, as developing countries are no longer peripheral. The Ministry of Energy predicts that developing countries will grow by 4% per year, while the G7 countries will grow by only 1.6%. Therefore, the Russian Federation's decision to turn towards the East is appropriate. Meanwhile, this week's economic forum in Davos will focus on the challenges faced by Western economies, such as high interest rates and public debt. However, experts argue that it is inappropriate to discuss growth without considering developing countries, which are becoming increasingly important.

Over the next 25 years, the share of developing countries in global GDP is expected to increase by 20 percentage points, exceeding 60% by the beginning of 2026. The Association of Russian Banks (ADB) provided this forecast in its information and analytical review. The review highlights that the classification of the world economy into 'core' and 'periphery' is no longer relevant due to significant changes in the balance of power between states over the past 30 years. The report notes that the situation has now reached a 'global rift.'

According to ADB Vice President Alexey Voylukov, the active phase began in 2018 with the start of the trade war between the United States and China. He stated that the extensive sanctions imposed on Russia and its allies in 2022, along with the recognition of the need to rebuild industry and trade, have hastened the 'global fracture.'
The Ministry of Economic Development confirmed to Izvestia that developing countries are increasingly determining the vector of the world economy. They predict a growth rate of 4% per year in the next decade, while developed countries are expected to grow by no more than 1.7%, and the G7 by 1.6%.
In 2023, developing countries accounted for around 58.8% of global GDP. Alexey Voylukov noted that the states in the Asian region made the most significant contribution to this growth due to digitalization and the transfer of production to countries with cheaper labor.

The ADB review predicts that the BRICS member states, including China, India, Russia, Brazil, and South Africa, will account for over 50% of global GDP by 2030. In the last 20 years, it has grown from 8% to 31.5%. Meanwhile, the G7 countries (Canada, France, Germany, Italy, Japan, UK and US) have seen their contribution decrease from 65% to 44%.
The ministry added: in the future, cooperation between the Russian Federation and the BRICS countries will play a significant role. Their share in Russia’s trade turnover in 2023 increased by one and a half times. And taking into account the expansion of the block, in the coming years it will exceed 50%. The department plans to actively increase foreign economic relations with BRICS through the development of transport and logistics infrastructure projects, as well as increased investment and financial cooperation, the press service of the Ministry of Energy said.
According to Ksenia Bondarenko, senior lecturer at the Department of World Economy at the Faculty of World Economy and International Politics at the National Research University Higher School of Economics, these countries are facing fundamental problems such as weak demand, increased inflation, high levels of public debt, risks in the banking sector, low birth rates, and difficulty in achieving rapid growth.
According to Natalya Milchakova, a leading analyst at Freedom Finance Global, some other countries, such as Tajikistan, also exhibit high GDP growth rates. However, this is primarily due to large volumes of transfers from citizens who left to work abroad.

This highlights the importance of Russia's pivot to the East.
The share of developing countries in global GDP is expected to continue growing, as noted by Elena Voronkova, Associate Professor of the Department of State and Municipal Finance at the Russian Economic University named after G.V. Plekhanova. One reason for their investment attractiveness is the openness of their markets to structural transformations, the availability of free niches in promising industries, and abundant resources. Additionally, the expansion of IT companies' activities will help increase income.
Furthermore, developing economies have amassed substantial international reserves, with a significant portion being held in gold, according to Elena Voronkova. This can aid in maintaining stable macroeconomic development and bolster the influence of these nations in global affairs. For instance, China's international reserves are valued at around $3.4 trillion, as noted by the expert. Other countries such as Saudi Arabia, Russia, India, and Brazil also possess substantial reserves.
Natalya Milchakova from Freedom Finance Global noted that the Russian Federation has significant influence among developing countries. The Ministry of Energy recalled that Russian President Vladimir Putin stated that the country's economy ranks first in Europe and fifth in the world in terms of purchasing power parity (PPP), which reflects the volume of GDP in relation to the price of a common basket of goods and services, rather than nominal value.
In 2022, Russia shifted away from its previous economic model, which prioritised supplying cheap energy resources to the European Union in exchange for engineering products and consumer goods. Instead, the Russian economy has turned its focus to the East, according to Natalya Milchakova from Freedom Finance Global.

She believes this is the correct decision, as China and India are expected to provide a quarter of global oil demand by 2030 and are currently key importers of Russian energy resources. In 2023, the economy of the Eurozone and the EU suffered a significant decline due to the rejection of inexpensive energy resources from the Russian Federation.
The World Forum (WEF) in Davos, which began on January 15, will address current issues in the global economy. Key topics to be discussed include digitalization, AI, tight monetary policy, banks, high public debt, global trade, climate, and cybersecurity. It is worth noting that Russia was not invited to participate for the second time.
According to Alexey Tarapovsky, founder of Anderida Financial Group, the forum in Davos is a place where representatives of different countries discuss achieving the goals set by the world's leading economies. He notes that over time, the influence of developing countries has grown, making it inappropriate to discuss the world economy without their input.

However, the program is still largely shaped by developed countries. According to Alexander Abramov, head of the laboratory for analysis of institutions and financial markets at the Institute of Applied Economic Research at RANEPA, Davos continues to be the center of international discussions. Although the issue of interaction between the first and second has moved to the background, there is still a decrease in attention to developing markets due to the tension in relations between the South and the North.