BRICS’ admission of Saudi Arabia ‘enhances future economic growth’: Experts

Cairo Square, Riyadh

BRICS has invited Saudi Arabia, the UAE, Argentina, Egypt, and Ethiopia to join the bloc as new members as of Jan. 1, 2024. This will increase the number of bloc members to 11 countries.

BRICS, which currently comprises five countries: namely, China, Russia, Brazil, India, and South Africa, accounts for approximately 26% of the global gross domestic product (GDP), 42% of the world population, and 16% of international trade.

Saudi Arabia is BRICS' largest strategic partner in the Middle East, thanks to its economic development, stability, and strategic location.

Data showed that BRICS outperformed the G7, which includes the world's most advanced economies, for the first time, as the former’s contribution to the global GDP reached 31.5%, compared to 30.7% for G7 countries.

Saudi Arabia's accession to BRICS is a strong addition and will allow room for increasing and bolstering the economic cooperation between the Kingdom and the BRICS countries, which will reflect positively on Saudi Arabia's future economic growth, experts told Argaam.

BRICS is not an economic organization but a purely political one that brought together the states dissatisfied with the unipolar world regime, seeking to replace it with a new one where the bloc has a larger weight.

BRICS Significance

“BRICS has to dominate a leading position in the global economy, as it plays an important role thanks to its economic weight, political influence and development cooperation,” said Cyril Ramaphosa, the South African President, lately in the bloc meeting.

Saudi Foreign Minister Prince Faisal bin Farhan said Saudi Arabia is looking forward to developing more cooperation with BRICS nations in all fields, especially the economy.

The Kingdom has promising economic fundamentals in addition to its role in achieving the energy market’s balance, added bin Farhan.

Saudi Arabia appreciates an invitation by BRICS to join the group and would study the details before the proposed Jan. 1 joining date, the foreign minister noted.

What does the Kingdom's invitation mean?

Economist Mohammed Makni, Professor of Economics at Imam Muhammad Ibn Saud Islamic University, said Saudi Arabia's entry into the BRICS is a strong addition thanks to its strong economy, which is deemed the largest in the Middle East.

Economist Mohammed Makni, Professor of Economics at Imam Mohammed bin Saud University

Makni went out to explain that the Kingdom also has massive stockpiles of gas and energy around the world, supplying approximately 25-30% of the world's energy. He also believes that Saudi Arabia, as an OPEC leader, will be a significant addition to BRICS.

The Kingdom is strategically located with logistics potential for Chinese products, Makni stated, adding that Saudi Arabia, in line with Vision 2030, became a promising emerging market able to cater for the goals of major states including Russia, China, and India.

The Shanghai Cooperation Organization is seeking to encourage Saudi Arabia to join the bloc, owing to its position in the Arab and Islamic world, geopolitical stance, as well as its economic and strategic role in achieving global and regional stability, Fawaz Al-Alamy, an international trade expert, told Argaam.

Al-Alamy said that Saudi Arabia controls 19% of the world's oil reserves, 12% of global output, and more than 20% of global sales, with reserves totaling 267 billion barrels.

The Kingdom also has a domestic and global refining capacity of more than 5 million barrels per day, and the bloc countries, particularly China and India, are important markets for GCC oil imports.

Fawaz Al-Alamy a member of the International Trade Experts

A Possible Option?

Makni cited a statement by Russian President Vladimir Putin in which he stated that the organization is working to achieve independence in the issue of trade exchange and the international trade process in the local currency rather than a common currency.

He also warned that a unified currency and the attempt to influence the US dollar might weaken BRICS.

Meanwhile, Al-Alamy explained that BRICS is not only an economic organization but an absolute political one that gathers a group of nations unsatisfied with a unipolar world system.

The bloc seeks to replace this system with a new one where BRICS can have a larger weight. However, this goal might not be achieved as western countries are still the main partners of the bloc in the fields of economy, culture, and trade exchange.

The economic and integration projects of the BRICS nations are still under discussion. Therefore, a common currency plan for BRICS can be scrapped due to the need for the

establishment of a unified center for the issuance of money, which in turn requires a waiver of sovereignty in the economic field.

Alamy said that the common currency may conflict with the unannounced main goal of the group and may not tolerate competition with the US dollar, which accounts for 59% of total foreign monetary reserves and about 80% of global trade exchange. Moreover, the greenback’s hegemony has reached 90% of SWIFT payments.

Despite a decline in the dollar’s market share to 64% this year from 71% in 2001, it still dominates global markets, while the Chinese yuan holds just 2.7%.

Makni emphasized the Kingdom's openness to the world and ability to deal with both East and West countries, as well as its strong presence in a number of organizations, including the G20 and the Shanghai Cooperation Organization (SCO).

Makni said that Saudi Arabia will likely accept joining the BRICS, and its contribution will undoubtedly be strong in terms of economic aspects.

In addition, the Kingdom will support other countries, especially after the organization establishes a development bank. Therefore, Saudi Arabia will support the bank and the countries in need of financing from it.

Although the world has reservations about the Federal Reserve and the International Monetary Fund's policies, there are some points that the Kingdom may support in order to reform the global monetary system, the economist added.

Away from dominant political conditions, purely economic terms should be set for the needy and remote countries, as well as the countries that need international financing, he added, expecting that Saudi Arabia would contribute strongly to these aspects and become the main representative in the group.