We have just witnessed what could shake up economic relations around the world: the expansion of the BRICS to include new members! Meeting last week in Johannesburg, the five current members of the BRICS approved the inclusion of six new countries. What impact will this have on the global economy?

A look back at the origins of the BRICS

Since 1975, the world's economic powers, historically among the ten largest in the world, have been meeting informally. This grouping, currently made up of 7 members following the ousting of Russia in 2014, is made up of the United States, France, the United Kingdom, Germany, Italy, Canada and Japan; it is known as the G7. Since 2009, a new grouping has emerged: the BRICs, which have since become BRICS. It brings together emerging countries that have reached considerable levels of GDP (Gross Domestic Product). The BRICS include Brazil, Russia, India, China and South Africa.

The Johannesburg decision!

They accounted for just 5% of world GDP in 1990, but buoyed by considerable economic and demographic growth, this group of countries now represents more than a quarter of world GDP, more than 30% according to some institutes, i.e. at least as much as the G7. In addition to this highly favourable dynamic and growth, the heads of state of these members decided last week to add six more countries: Iran, Argentina, the United Arab Emirates, Saudi Arabia, Egypt and Ethiopia. As developing countries, the growth potential of these BRICS+ is significant. In addition to their economic weight, these eleven countries represent 46% of the world's population!

What are the consequences of this new balance of power?

While the hegemony of the United States and the dollar had been unchallenged since the Second World War, the emergence of China has reconstituted the world's economic bipolarity. On one side, the so-called "Western" countries, the G7, and on the other, the emerging countries, the BRICS+, led by China. The latter, which have become key economic players, intend to take full advantage of the opportunity to increase their influence. With new oil-producing countries set to join after enlargement, there is already talk of de-dollarisation.

This risk of a possible loss of influence by the G7 countries is relative, given the economic interdependence of all the countries we have mentioned. The important thing is to bear in mind that the economy is fluid and influenced by multiple factors. Diversification is essential to limit risk, and investing in growing countries is a potential source of significant returns. Wealth A7's wealth management advisers make asset allocations based on all these factors, so get in touch!

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