BRICS+ challenge G7 dominance, India and China driving global trade shift: EY report

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

The report examines key features of the evolving roles of the G7 and the BRICS+ bloc in global trade, highlighting the implications of BRICS+’s growing role in global trade, with a focus on India and China.

Let’s take a look at the key points of the report:

1. The share of BRICS+ in global merchandise trade is growing.

The share of the BRICS+ group in global merchandise exports increased from 10.7% in 2000 to 23.3% in 2023. On the other hand, the share of the G7 group in global exports declined by a margin of 16.2% from 45 .1% to 28.9% in the same period.

The share of the rest of the world in global merchandise exports remained stable, rising only marginally from 44.2% to 47.9% over this period.

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

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

In the BRICS+ group, in terms of exports, China’s contribution increased from 36.1% in 2000 to 62.5% in 2023. Next in importance is India, whose share was 7.9% 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 said.

3. High-tech exports of BRICS+ nations in global trade are gaining significant ground.

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

“The share of BRICS+ high-tech exports, comprising electronic data processing and office equipment, telecommunications equipment and integrated circuits and electronic components together, in the corresponding global exports, saw substantial growth from 5.0% in 2000 to 32.8% in 2022. reflecting the group’s shift to high-tech products,” the report said.

4. While the rupee depreciated, the yuan appreciated.

From the following graphs, it could be deduced that the Yuan has remained largely stable with a marginal appreciation in recent years and at the same time the INR has depreciated in recent years, especially in 2018.

While “individual exchange rates may depend on various factors, a common underlying factor would be how the US economy, particularly US inflation, is likely to perform relative to the inflationary experience of some of these major BRICS+ economies,” it said the report.