BRICS: Reshaping the Global Economic and Multilateral Landscape

Jakarta, INTI - Since the publication of Goldman Sachs' groundbreaking report in 2001, which predicted that four emerging economies—Brazil, Russia, India, and China (BRIC)—would become major players in the global economy, the BRICS bloc has grown into a formidable force. The report emphasized that these nations had a “healthier environment” for economic growth compared to many developed nations, forecasting an increased contribution to the global GDP. It declared, “It is time for the world to build better global economic BRICs.”

This prediction has materialized over the decades, as BRICS has evolved into a coalition with significant influence on global economic and geopolitical affairs. The bloc has since expanded to include South Africa and continues to court additional members, signaling its intent to reshape the global economic order.

The Birth and Expansion of BRICS

In 2006, leaders of the BRIC nations formed an informal coalition to coordinate economic and political strategies toward shared objectives. This coalition matured with the first BRICS Summit in Yekaterinburg, Russia, in 2009. By 2010, South Africa had joined, officially transforming BRIC into BRICS, marking the inclusion of Africa in the bloc’s aspirations for global influence.

The BRICS group’s expansion gained momentum in 2023 when the bloc invited six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. While Argentina later declined due to a change in government, and Saudi Arabia continues to deliberate, the inclusion of other nations reflects BRICS’ growing appeal.

Countries such as Cuba, Malaysia, Thailand, and Türkiye have expressed interest in future membership. Thailand, for example, submitted a formal letter of intent in 2024, citing potential benefits such as increased global influence and improved economic prospects.

Indonesia, the largest economy in Southeast Asia, is a notable observer of BRICS developments. As a member of the G20, Indonesia aligns itself with many of BRICS' objectives, including fostering sustainable economic growth, addressing inequalities, and advocating for a multipolar global order. While not yet an applicant for BRICS membership, Indonesia’s close ties with China and India, both BRICS founders, position it as a potential strategic partner or member in the future.

The Economic Power of BRICS

BRICS nations collectively represent over 3.3 billion people, accounting for more than 40% of the world’s population. Economically, the bloc contributes approximately 37.3% of the global GDP based on purchasing power parity (PPP), according to the International Monetary Fund (IMF). China leads the group, contributing 19.05% to global GDP, followed by India at 8.23%. In contrast, the United States and the European Union each contribute around 14.5%.

Dominance in Commodities Trade

One of BRICS’ most significant economic strengths lies in commodities. The bloc’s potential influence over global oil production has grown with the inclusion of major oil-producing nations like Iran, the UAE, and possibly Saudi Arabia. A report by S&P Global estimates that BRICS could control nearly half of the world’s oil production and account for 35% of global oil consumption.

The bloc's dominance extends beyond oil. Russia remains a leading exporter of natural gas and agricultural products, while Brazil excels in soybeans and coffee. India and China, with their vast manufacturing bases, contribute to global trade in textiles, electronics, and machinery. South Africa's mineral wealth, including gold and platinum, adds another dimension to the bloc's collective resource power.

Labor Market Dynamics

BRICS nations collectively boast a labor force of 1.5 billion people, with a participation rate of 60.6%, as reported by the International Labour Organization (ILO) in 2024. However, significant disparities persist, particularly in gender participation: 73.9% for men compared to 47.4% for women.

The informal economy remains a challenge, particularly in India, which accounts for the majority of the estimated 934.4 million informal workers across BRICS nations. The ILO highlights that transitioning informal work to formal employment is crucial for boosting productivity and ensuring equitable growth.

Indonesia shares similar challenges, with a substantial portion of its labor force engaged in informal sectors such as agriculture and small-scale trade. Collaborations with BRICS could offer insights and resources to address these issues, particularly in improving labor formalization and access to global markets.

Advancing Multilateralism Through BRICS

BRICS has positioned itself as a champion of a multipolar world order, advocating for reforms to global governance structures dominated by Western powers. Its initiatives include the establishment of the New Development Bank (NDB) in 2015, headquartered in Shanghai, China.

The Role of the New Development Bank

The NDB funds infrastructure and development projects across BRICS and beyond. Notable examples include modernizing South Africa’s freight rail systems and enhancing China’s liquefied natural gas transportation capabilities.

A key feature of the NDB is its emphasis on local currency financing, which reduces reliance on the US dollar and strengthens domestic financial systems. During the 16th BRICS Summit in Kazan, Russia, the bloc reiterated its commitment to expanding local currency financing, a move analysts view as a challenge to dollar hegemony.

Indonesia could potentially benefit from partnerships with the NDB, especially in infrastructure development projects aimed at supporting its growing economy. Collaborations on renewable energy, smart cities, and digital infrastructure align with both BRICS and Indonesia’s strategic goals.

Global Influence and Challenges

While BRICS continues to expand its economic and political reach, the bloc faces internal challenges. Diverging national interests and varying governance models often lead to disagreements on key issues. For instance, China’s economic dominance within the bloc raises concerns among smaller member states, including South Africa and Brazil.

Observers remain divided on whether BRICS aims to directly counter Western-led institutions like the G7 or establish parallel frameworks. Nonetheless, its focus on cooperation and inclusivity resonates with developing nations seeking alternatives to Western-centric economic models.

In Indonesia, BRICS serves as both a partner and a potential competitor. As Indonesia pursues its own leadership role in ASEAN and the G20, its interactions with BRICS could shape regional and global economic policies.

BRICS has emerged as a transformative force in the global economy, offering a platform for developing nations to assert their influence. Its growing membership, economic strength, and innovative approach to multilateralism position the bloc as a key player in shaping the 21st-century global order.

For Indonesia, BRICS represents both an opportunity and a challenge. By engaging with the bloc, Indonesia could strengthen its economic resilience and global influence, ensuring its voice is heard in the evolving geopolitical landscape.