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GDP Share Of New BRICS Members Totals To Be Just 11%

BRICS' new additions to increase global oil production share by to 40% from the current 18%.

<div class="paragraphs"><p>Source: BQ Story</p></div>
Source: BQ Story

The GDP share of the six new members, being added to the five-member BRICS grouping of emerging economies from January, will be just 11%, with Saudi Arabia's contribution the highest at 4%, an analysis shows.

The proposed addition of Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to the five-member BRICS, or Brazil, Russia, India, China and South Africa, will also see the grouping's share in the global GDP rising to 30 per cent from 26 per cent now and that of the population to 46 per cent, according to an analysis by the SBI Research.

The expansion decision, effective January 1, 2024, was announced at the recent BRICS summit held in Johannesburg.

Currently, China contributes 70% of the BRICS' GDP, which will decline to 62%, while India chips in with 13%, will inch down to 12%.

Russia contributes 8%, Brazil is at 7% and South Africa contributes a paltry 2%, giving a combined 26% of global economic output.

Russia's share will fall 7%, while that of South Africa will halve to 1% but Brazil's share will remain unchanged after the expansion, the report said sans offering a reason for the exception of Brazil.

Among these six economies, with Rs 6,81,259 crore in bilateral trade in FY23, the UAE is the largest trading partner for India, followed by Saudi Arabia at Rs 4,23,834 crore, Egypt at Rs 48,792 crore, Argentina at Rs 39,100 crore, Iran at Rs 18,680 crore and Ethiopa at Rs 5,154 crore, said Soumya Kanti Ghosh, chief economic adviser at the State Bank of India.

Among the new members, Saudi Arabia will be the biggest economy, chipping in with a 4% GDP contribution, followed by Argentina, the UAE, and Egypt with 2% each, and Iran adding 1% incrementally to the GDP, with Ethiopia's addition having practically no impact on the grouping's economy.

The Saudi economy was about USD 1.1 trillion in 2022 (already a G20 member), Argentina's at USD 632 billion, the UAE's at USD 507 billion, Egypt at USD 477 billion, the Iranian economy at USD 388 billion and that of Ethiopia at USD 127 billion, according to the available data.

These six economies will add 11% to the current GDP of the BRICS, Ghosh said in the report, which is 4% of the global GDP in 2022 terms and will help boost the BRICS+6's share to 30%, he added.

Even after the new addition, China (USD 18.1 trillion in 2022) and India (USD 3.75 trillion) will continue to contribute 74% of the overall GDP of the grouping, down from 83% of the USD 26.2 trillion economy pre-expansion.

The Russian economy was worth USD 2.2 trillion in 2022, while Brazil's was worth USD 1.8 trillion and South Africa's was worth USD 468 billion.

BRICS+6 and G20 (Group of 20 largest economies) have their share in the global population at 3.7 billion and 5.1 billion, respectively, while the GDP share is USD 29.2 trillion and USD 70.4 trillion, and forex reserves are USD 5.5 trillion and USD 9.4 trillion, respectively.

Currently, the five-member grouping is home to 40% of the world's population, which controls 26% of the global GDP, But with the six new members (BRICS+6), their GDP share will jump to 30% and their share of the population will go up to 46%.

However, the biggest impact will be on the share of global oil production, which will increase to 40% from the current 18%, while their oil intake share will jump from 27% to 36%, according to the note.

Similarly, their share in global merchandise trade will rise from 20% to 25%, and that of global services trade will increase to 15% from 12%, the note said, adding that their share in global forex reserves will increase by 600 basis points to 45%.

On the massive increase in the share of oil trade -- Saudi has the second largest oil reserves after Russia -- the oil math will be the potential game changer for payment system and price discovery, says the report.

The acronym BRICS was originally coined in 2001 by Goldman Sachs economists led by Jim O'Neill. Later in December 2010, South Africa was added as the fifth member.

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