Saudi Arabia And UAE Officially Join Brics: What Will It Mean for The Bloc?
The comments below are an edited and abridged synopsis of an article by Fareed Rahman
The expansion of Brics to include Saudi Arabia and the UAE is expected to offer new investment opportunities for the Arab world’s two largest economies while growing the group’s influence globally.
Saudi Arabia, along with the UAE, Egypt, Iran and Ethiopia, joined Brics on January 1, doubling its membership to 10, with Brazil, Russia, India, China and South Africa as the original members.
The addition of the two major Gulf economies to the bloc will increase the level of connection between the region and the rest of the world and will improve the rate of investment.
The UAE and Saudi Arabia have continued to post economic growth despite inflation, high interest rates and geopolitical tensions as they focus on diversifying their economies.
Saudi Arabia’s economy, which grew by 8.7% in 2022, the highest annual growth rate among the world’s 20 biggest economies, is expected to expand by 0.8% in 2023.
Meanwhile, the UAE’s economy is expected to grow 3.4% in 2023 with oil GDP growth projected at 0.7% and non-oil GDP at 4.5%, backed by a strong performance in tourism, real estate, construction, transport, manufacturing and a surge in capital expenditure.
The addition, the two major oil exporters will reinforce their bargaining power and influence in OPEC.
China and India, two key members of Brics, are the world’s second- and third-largest consumers of oil, with strong energy ties to the Gulf countries.
More bilateral trade in local currencies is expected as the new countries join the group.
Last year, the UAE and India signed agreements to establish a framework to promote the use of local currencies in cross-border transactions and boost co-operation in interlinking their payment and messaging systems.
After the deal, India began buying UAE oil in Indian rupees to boost trade between the two countries.
Meanwhile, calls for the overhaul of the international monetary system and the development of an alternative currency to the US dollar are expected to grow as Brics expands.