BRICS is an organization of five nations – Brazil, Russia, India, China, and South Africa. Initially, the group was named BRIC. With the addition of South Africa in 2010, the current name was adopted. With individual economies performing very well, BRICS is poised to play a major role in shaping international trade and politics.
BRICS is home to more than 40 percent of the world’s population. It has a combined nominal GDP of around US$18.6 trillion and accounts for about 23 percent of the gross world product. Having such a large population and a huge economy under them, BRICS has a lot of clout in the international community. The philosophy of BRICS is guided by the policy of non-interference.
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However, what is worrying is that though India, South Africa, and Brazil are vibrant democracies, Russia and China are former and current communist nations that have a long history of suppressing individual freedoms. Some experts believe that these two nations might seek to utilize the BRICS platform as a means to expand their ideological influence. This is definitely a problem for the U.S.
While India, South Africa, and Brazil are allies of America, both China and Russia have a long-term agenda to harm the United States. As such, the U.S. intelligence networks consistently track every move made by the organization to identify which policies need to be countered. This allows the U.S. to use its allies in BRICS to ensure that the organization never adopts a policy that is against American interests.
Better than the S&P 500?
Though it is early days in 2019, most countries in the BRICS seem to be already outperforming the S&P 500. In fact, emerging markets as a whole have been performing very well since the start of the year.
While the S&P 500 had grown by only 8.4 percent by the end of January, MSCI China surged by almost 12 percent in the same month. The VanEck Russia ETF trailed close with a surge of 12.7 percent while the MSCI Brazil profited the most with an 18 percent gain last month. The MSCI Emerging Markets Index rose by 9.43 percent in January.
However, the growth does not seem to have legs as far as Russia and China are concerned. Brazil is the only country with an economy on an upward trend. Russia is growing, but at a slower pace. And though China showed growth in the first month, most investors are pretty negative about the growth prospects of the country over the year due to its trade conflict with the U.S.
The surge in January 2019 is said to have been caused by the pullback in 2018. This made BRICS investments undervalued, thereby attracting investors who poured their money into emerging markets at the start of the year. “The current recovery in emerging market assets is not a relief rally… It is the start of a reverting move,” Gabriel Gersztein, global head of emerging markets for BNP Paribas in Sao Paulo, said to Forbes.
Iran deal and Venezuela
BRICS has been a strong opponent of U.S. sanctions against Iran that are aimed at making the Middle Eastern country change its policies regarding the missile development program and stop its support for militant groups in the region.
BRICS nations argue that any sanctions on Iran that will negatively affect oil supplies are bad for their economies. China and India, being highly populated nations, will have difficulty in finding alternate suppliers. Taking into account this factor, the U.S. has often made exceptions for both countries when it comes to importing oil from Iran.
An ideological clash developed within BRICS over the ongoing Venezuela crisis. While Brazil sided with the U.S. against the current president Nicolas Maduro in Venezuela, Russia declared its full support for Maduro.
Though representatives from both Brazil and Russia have maintained that their opposing views on Venezuela will not affect the bilateral relationship between them, it would be interesting to see what happens if the U.S. decides to militarily intervene in Venezuela to oust the Maduro regime.