BRICS nations try to boost economic clout
The world’s major developing nations are laying plans to combine their economic clout in a challenge to the role that U.S.- and European-led institutions such as the World Bank and International Monetary Fund play in global economic affairs.
Meeting this week in Durban, South Africa, the loose consortium known as the BRICS nations – Brazil, Russia, India, China and South Africa – are expected to approve establishment of a “BRICS bank” to fund infrastructure projects in poorer countries. They are also debating creation of a pool of funds to use in times of crisis, similar to what the IMF does with money from its member nations.
Ahead of the meeting, Brazil and China agreed to a separate $30 billion currency swap that would allow much of the trade between the two nations to be financed without using dollars or euros as a common means of exchange.
The efforts are modest in relation to the size of the five economies involved and small compared with the world’s annual flow of trade and financing. The bank, for example, would start with an estimated $50 billion; the BRICS countries combined hold about $4.2 trillion in foreign reserves, most of it in China, and have a combined annual economic output of around $15 trillion, about 20 percent of the world total.
But it is the most concrete collective step yet from a group of nations that are expected to drive world economic growth in the coming century and that have developed a sharp sense of competition with the United States and Europe over global economic leadership.