BRICS+ Challenges G7 Dominance, With India And China Driving Global Trade Shift: EY Report

The growing influence of countries like China and India in BRICS+ is reshaping global trade dynamics and challenging G7 dominance, paving the way for a multipolar system according to a recent report by Ernst n Young (EY) India.

The report examines the key features of the evolving roles of G7 and BRICS+ Block in global trade, highlighting the implications of the growing role of BRICS+ in the global trade framework, with an emphasis on India and China.

Let's have a look over the key points of the report:

1. The share of BRICS+ in the Global merchandise trade is on the rise.

The share of BRICS+ group in global merchandise exports increased from 10.7 per cent in 2000 to 23.3 per cent in 2023. On the other hand, the share of the G7 group in global exports fell by a margin of 16.2 per cent points from 45.1 per cent to 28.9 per cent over the same period.

The share of the rest of the world in global merchandise exports remained stable, increasing only marginally from 44.2 per cent to 47.9 per cent during this period. 

“Thus, it is the BRICS+ group, which has replaced the G7 group in terms of their respective shares in global merchandise exports.” the report stated.

2. India and China to play a prominent role in determining the global trade dynamics

In the BRICS+ group, as far as exports are concerned, China’s contribution increased from 36.1 per cent in 2000 to 62.5 per cent in 2023. Next in importance is India, whose share was 7.9 per cent in the group’s exports in 2023.

“Going forward, India and China are likely to be two major players in the global economy, both in terms of exports and imports” - the report stated.

3. High Technology Exports by the BRICS+ Nations in the Global Trade is gaining significant ground.

The highest share in global exports by BRICS+ group in 2022 was textiles at 49.6 per cent, followed by telecommunications equipment at 41.3 per cent, clothing at 36 per cent, electronic data processing and office equipment at 35.7 per cent, and fuels at 30.3 per cent.

“The share of high technology exports from BRICS+ group comprising electronic data processing and office equipment, telecommunications equipment, and integrated circuits and electronic components together, in corresponding global exports, showed a substantial increase from 5.0 per cent in 2000 to 32.8 per cent in 2022 reflecting the group’s shift towards high technology-intensive products," the report stated.

4. While the Rupee depreciated, the Yuan appreciated.

From the following charts, it could be inferred that the Yuan remained largely stable with marginal appreciation in recent years and at the same time, the INR has depreciated in recent years, particularly in 2018 onwards.

Though “individual exchange rates may depend on various factors, one underlying common factor would be the way in which the US economy, particularly the US inflation, is likely to behave in relation to the inflation experience of some of these major BRICS+ economies," the report stated.

The 16th BRICS Summit, held from 22 to 24 October in Kazan, Russia, carries significant relevance in the current geopolitical landscape, be it from dispelling all speculations about Russia‘s isolation to that of replacing the hegemony of the US dollar in the global payments system with a BRICS alternative.

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