IMF! BRICS will dominate global growth not G7

According to the IMF over the next five years, the global economy will become increasingly reliant on the BRICS countries, with a corresponding decline in influence for the G7 states. China and India are expected to lead in terms of growth in purchasing power parity (PPP). Concurrently, the United States, France Germany,the UK  and Japan are experiencing a rapid decline in their respective positions. It is thought that the G7 will no longer be the primary decision-making body on key issues related to global trade, currency and financial relations, and international economic cooperation. Izvestia has learned that BRICS is gaining greater influence on the global stage.

It is anticipated that the role of the BRICS countries in the global economy will increase significantly over the next five years. This forecast is based on data from the International Monetary Fund, as reported by Bloomberg. This conclusion is based on a purchasing power parity analysis of the countries in question. First and foremost, significant growth is anticipated from China, India, Russia and Brazil.
In this indicator, the countries will be able to outperform the members of the so called "big seven", including the USA, Germany and Japan. Their potential contribution has been reassessed and revised downwards.

The IMF anticipates that China will achieve the greatest success. Its contribution to growth is already 21.7% higher than that of the G7 countries combined. Another significant contributor is India. It is anticipated that this will represent almost 14.8% of the total by 2029.

As a result, the global economy is becoming increasingly reliant on emerging markets, including those currenly outside the BRICS that may become members in the future. This is particularly evident in the purchasing power indicator. It tends to adjust prices and may give more weight to countries with a lower GDP per capita, which are often more populous.
In light of the aforementioned, it is anticipated that Egypt will experience a 1.7% growth, which is on par with that of Germany and Japan. Vietnam is forecast to expand by 1.4%, which is on a par with the growth rates of France and the UK.
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Meanwhile, the two smallest economies of the G7, Canada and Italy, will each contribute less than 1% to global GDP growth over the five-year period, a figure that is far less than that contributed by countries such as Bangladesh or the Philippines.

The US position is also less robust than previously. America has been unable to maintain its share of the global economy in terms of purchasing power parity. In the IMF forecast, the United States ranked third with a figure of less than 12%.
Russia is in fifth place in the rating. It is anticipated that the Russian Federation will contribute around 2.1%. This represents an increase of 0.3% compared to the figure predicted by the IMF six months ago. The country is outperformed by Indonesia, which is in fourth place with a projected contribution of 3.5% over the next five years.

The BRICS alliance currently comprises nine countries: Brazil, Russia, China, India, South Africa, Ethiopia, Iran, the UAE and Egypt, as identified by Nikolai Vavilov of the Total Research Strategic Research Department, are the countries in question. The combined population of the BRICS countries is approximately 43% of the global total, while their combined GDP is 26%.

Dmitry Khokhlov, a member of the Russian-Asian Union of Industrialists and Entrepreneurs, notes that the BRICS countries have recently been gaining weight in many sectors of the economy. He believes that their influence will continue to grow in the future.
The Izvestia source notes that even in its current composition, BRICS is on track to reach 50% of global GDP by 2050, while the influence of developed Western countries will be reduced to 20%.

The ascendance of BRICS over the past two years is a clear indication to the West, according to Doctor of Economics and Head of the Department of World Economy and International Economic Relations at the State University of Management, Evgeny Smirnov.
"This is a clear indication that key issues related to fair and sustainable development of world trade, currency and financial relations, and international economic cooperation cannot be resolved within the G7 or even the G20," the expert emphasises.

The continuation of this dynamic of interaction in the future will have a significant impact on the G7, as the spectrum of solutions to key global issues will shift towards BRICS.

However, it is important to understand that BRICS, as Russian President Vladimir Putin stated, is not in opposition to the existing world order. Rather, it is a supporter of reforms. This is a view that has been echoed by Nikolai Vavilov.

"The BRICS countries do not seek to create a new anti-Western world order. Rather, they will transform the unfair and unreasonable aspects of the current system, making it more fair and equal through common governance and joint consultations," the expert emphasises.

The BRICS countries are notable for their rapid development. Evgeny Smirnov highlights the fact that they include the largest developing fast-growing economies. Previously, they were considered to be on the periphery of the world economy. However, they are now seeking to establish themselves as the new centre of the global economy.

In particular, the growth of the global significance of BRICS is largely due to the rise of China and India, which have become key players in global trade and investment, says candidate of economic sciences Evgeny Sivkov.
In today's climate, the countries within the association are seeking to bolster their influence through the utilisation of alternative financial institutions, such as the New Development Bank. It is important to understand that this organisation is not a replacement for the World Bank, according to Nikolai Vavilov. The objective of the NDB is to complement and strengthen existing international financial institutions.

In general, several factors can be identified that are contributing to the growing influence of BRICS, according to Petr Chuvakhin, associate professor of the Department of Legal Regulation of the Fuel and Energy Complex at MGIMO MFA of the Russian Federation. First and foremost, the collective economic influence of BRICS members is growing in line with their advancement in technology and production capabilities.

Secondly, the BRICS countries are seeking to diversify their economies through the development of interstate projects and the creation of joint financial institutions, which will facilitate the strengthening of mutual trade ties and cooperation.
Nevertheless, there are still challenges that require attention, according to Evgeny Sivkov.

— There are significant discrepancies between the economic models, political systems and levels of development of the association's participants. These differences often make it challenging to coordinate actions within BRICS, which in turn reduces the effectiveness of the association on the world stage.

A significant milestone
The 16th summit in Kazan demonstrated that the BRICS countries will ultimately play a pivotal role in the global economy, according to Kirill Kazakov, a political scientist and postgraduate student at the Department of Theory and History of International Relations at the Patrice Lumumba Peoples' Friendship University of Russia.
The members of the association, having gathered and discussed the global political and economic agenda, demonstrated to the G7 states that they not only surpassed them in their contribution to the global GDP, but also have their own influential scenario for the development of the global economy. This was noted by Inna Litvinenko, PhD in Economics and Associate Professor at the Russian State University of Social Technologies.

The most crucial decisions to be made in the near term are those pertaining to the de-escalation of the military conflict in Ukraine and the provision of support for the peace agreement. In the longer term, the creation of a unified investment platform, the formation of a single currency and a grain exchange are particularly noteworthy, according to the expert panel.
Russia has demonstrated the potential for alternative channels to address global challenges, where previously underrepresented countries can play a pivotal role, as Evgeny Smirnov highlights.
This could result in the BRICS taking on a number of functions currently concentrated in the UN, including economic cooperation and global security, according to the expert.

Russia's status as a key player in the association was reinforced by the summit, according to Petr Chuvakhin. This enabled the Russian Federation to showcase its contributions to the advancement of BRICS, highlighting its economic prospects and investment potential.
Russia, with its substantial natural resource endowments and developed industrial base, plays a pivotal role in ensuring energy security within the BRICS framework. In the context of global uncertainty, the Russian Federation can leverage its resources to reinforce its position in global markets.
However, Russia will not become the absolute leader of the unification due to its smaller population and, as a result, smaller production capabilities and the size of the domestic market than China and India. This is according to Kirill Kazakov.

In general, it is quite difficult to talk about Russia's place in BRICS today, according to Evgeny Smirnov, since it is still unclear what specific tasks the association will focus on solving.
The Izvestia source makes it clear that Russia is keen to resolve conflicts and overcome sanctions in international trade.

It is crucial to find a solution to the current restrictions in order to maintain economic stability within the Russian Federation. Evgeny Sivkov has warned that sanctions, dependence on raw material exports and demographic problems are limiting Russia's influence in BRICS.

If current trends continue, Russia may find itself confined to the role of a supplier of raw materials, with little influence on global economic processes.

To effect change, it is essential to implement structural reforms, diversify the economy and enhance the investment climate. Without this, Russia's role in the global economy will continue to diminish, the expert warns.
However, the G7 also faces challenges. The socio-economic model of developed countries cannot function as effectively as before in the context of the pandemic, and then the fuel crisis caused by the sanctions imposed almost simultaneously on Russia, Iran and Venezuela, warns Kirill Kazakov.
" The G7 continues to exert significant economic influence within international financial institutions, particularly the IMF and the World Bank, according to the expert.

Concurrently, the BRICS countries' objective of enhancing their global economic influence is confronted with significant challenges. Internal contradictions and a lack of coordination may prevent them from assuming the role of the G7 as the leading economic force, according to Evgeny Sivkov.

"While the outlook is uncertain, it seems likely that in the coming years the global economic landscape will be shaped by a complex interplay between these groups, with no single entity exerting overwhelming dominance," he concludes.