“The BRICS alliance is convincing other developing countries in Asia, Africa, and South America to challenge the G7 bloc. BRICS is also persuading other countries to ditch the US dollar for global trade and use local currencies instead.”
PEGASUS REPORTERS, LAGOS | OCTOBER 19, 2023
According to data from the UK-based research firm Acorn Macro Consulting, the BRICS alliance has overtaken G7 countries in terms of purchasing power parity (PPP).
BRICS contributes 31.5% to the global GDP. The G7 alliance is slightly behind BRICS as the group of developed countries contributes 30.7% to the world’s GDP. Therefore, BRICS is economically ahead of the G7 alliance in PPP by 0.8% in 2023.
If BRICS begins a full-fledged attempt to ditch the US dollar for global trade, then the gap in GDP could widen further. The move might put the developed Western countries on the back foot and tilt the financial power to the East. Read here to know how many sectors in the US will be affected if BRICS completely stops using the dollar.
The G7 is a group of rich, industrialized, and developed countries and falls slightly behind the BRICS alliance in GDP. The group boasts of countries such as the US, Canada, France, Italy, Germany, Japan, and the UK. BRICS turned into an 11-member group this year after taking a historical decision to expand the bloc at the 15th summit in August this year.
The BRICS alliance is convincing other developing countries in Asia, Africa, and South America to challenge the G7 bloc. BRICS is also persuading other countries to ditch the US dollar for global trade and use local currencies instead. The development will strengthen their native economies leading to a decline in demand for the US dollar in the international markets.
If the US dollar has no demand, it would find no means to fund its deficit leading to turmoil in the American economy. In conclusion, BRICS could create further damage to G7 and the US dollar if they play their cards right. If the US dollar is no longer used for global trade, then BRICS could flex their muscles against the G7 group.
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