BRICS' role in economic stability hailed amid intl shocks

BRICS can serve as a potential stabilizer for the Global South as emerging economies grapple with overlapping shocks — from climate-driven disruptions to geopolitical conflict and a resurgence of protectionism — that are straining growth and investment, experts say.

According to Priyanka Kishore, director and principal economist at the Singapore-based consultancy Asia Decoded, BRICS plays an important role in facilitating dialogue and information-sharing among major emerging economies.

For Amitendu Palit, a senior research fellow with the Institute of South Asian Studies at the National University of Singapore, BRICS' biggest appeal is the organization's economic size.

The group's 11 members and 10 partner countries account for more than 40 percent of global GDP, giving it the weight to expand trade and investment flows across regions.

Greater intra-BRICS commerce would benefit not only the members themselves but also the wider economic zones they anchor, Palit said.

Still, he noted that the bloc is far from cohesive enough to function as a rules-based free trade area: its members are geographically dispersed and operate under vastly different political systems, institutions and production standards.

On the other hand, those divergences are also what make BRICS a "unique grouping", he said.

"If it is able to move forward on its agenda of encouraging more trade in local currencies among members and enhancing food security, then it should be able to provide some solutions to unilateral trade actions elsewhere."

Despite its limitations, BRICS, as an intergovernmental organization of developing countries, provides "concrete, nonalignment-friendly mechanisms" to cushion member economies against external vulnerabilities, according to Jaziri Alkaf Abdillah Suffian, chairman of BRICS International Malaysia and a former senator in Malaysia's parliament.

Mechanisms developed under BRICS allow full members and partner states to settle bilateral trade using local currencies, he said, and local currency settlements can mitigate exchange rate risk and foreign currency liquidity squeezes during global market crashes.

The most recent example of this saw President Xi Jinping and Egyptian President Abdel Fattah El-Sisi welcome the renewal of a bilateral local currency swap agreement and the expansion of the swap scale. The agreement was reached in Cairo when Xi made a state visit to Egypt earlier this month.

BRICS has accelerated its push to widen its presence across the Global South.

It admitted Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates in early 2024, its biggest expansion since its inception. Indonesia joined as the newest full member in January 2025.

India is this year's rotating chair of BRICS, with New Delhi hosting the 18th BRICS Summit. This year's theme is "Building for Resilience, Innovation, Cooperation and Sustainability".

The summit comes as the Global South faces threats from extreme weather as a result of a likely super El Nino, higher tariffs imposed by the United States, and an escalating crisis in the Middle East that has greatly raised global oil prices.

Some economists have said rising demand for artificial intelligence has boosted exports of countries that rank higher in the technology value chain, dampening the impact of higher US tariffs on their economies.

This is where BRICS can have a "more meaningful impact", Kishore of Asia Decoded said.

Intra-BRICS trade has been rising for the past 20 years, but it still accounts for only about 5 percent of global trade, she said.

"By reaffirming its commitment to free trade and strengthening trade engagement between members through instruments such as the proposed BRICS invoice discounting mechanism, it can help member countries diversify away from the US market," she said.

prime@chinadailyapac.com