Anticipation has been building around the BRICS countries – Brazil, Russia, India, China, and South Africa – and their potential to challenge Western dominance on the global stage. However, this idea is looking more like a pipe dream, and less of a reality, according to renowned economist Nouriel Roubini.
Despite the considerable buzz they’ve generated, the BRICS countries represent a patchwork of political systems and economies that, in Roubini’s view, severely limit their capacity to take the reins of the world order.
“The theory that the BRICS were poised to rule the world seems to be misguided,” Roubini stated.
Roubini highlighted that India is the only country in the bloc currently witnessing robust growth. Russia’s economy is feeling the strain due to the ongoing conflict in Ukraine, while China’s economic activity has been disappointing since its post-pandemic reopening.
In terms of government structures, the BRICS countries represent a blend of three democracies and two autocracies. These divergent structures are hardly conducive to cohesive action, and the long-standing border dispute between China and India adds another layer of complexity to their alliance.
Roubini noted, “The BRICS coalition is quite a hodgepodge. It comprises countries with stark differences – economically, socially, politically, and geopolitically. Right now, only India is growing impressively. The others are merely trudging along.”
BRICS countries have long portrayed themselves as an alternative to the Western-influenced global financial framework. They were once among the fastest-growing economies globally, which added credibility to their claims.
Indeed, the Russian President, Vladimir Putin, stated last year that the BRICS group was working on creating a currency rival to the US dollar. However, a top Indian official recently dismissed such plans.
Yet, individual BRICS nations have been independently trying to reduce their dependence on the US dollar. Notably, China has been active in its efforts to globalize the yuan, and Brazil is exploring a currency union with Argentina.
Roubini, when asked about challenges to the dollar’s dominance, suggested that the West could secure the dollar’s future by involving the developing world through meaningful investments. He added that while a rival currency could offer a shield from Western sanctions, it wouldn’t automatically stimulate economic growth.
In his words, “Simply establishing an alternate currency system doesn’t guarantee economic prosperity.”
As a result, while the BRICS nations continue their quest to reshape the global financial order, it appears they have many hurdles to overcome before achieving their ambitious goal. Entrepreneurs and investors may wish to bear these geopolitical dynamics in mind when making investment decisions in these regions.