BRICS Expansion with Saudi Arabia and the UAE Unleashes New Global Opportunities
The BRICS bloc’s expansion to incorporate Saudi Arabia and the UAE is anticipated to unlock fresh investment prospects for the Arab world’s two largest economies, concurrently enhancing the group’s global influence, according to analysts.
As of January 1, Saudi Arabia, the UAE, Egypt, Iran, and Ethiopia joined Brics, doubling its membership to 10 countries, alongside the original members Brazil, Russia, India, China, and South Africa.
Jihad Azour, the International Monetary Fund’s director for the Mena region, highlighted that the inclusion of the two major Gulf economies in the bloc will “enhance the level of linkages between the region and the rest of the world, improving the capacity to attract investment.”
Despite uncertainties such as high-interest rates, inflation, and geopolitical tensions, Saudi Arabia and the UAE have sustained economic growth by focusing on diversifying their economies. Saudi Arabia, with the highest annual growth rate among the world’s 20 biggest economies in 2022 at 8.7%, is projected to expand by 0.8% in 2023, according to the International Monetary Fund. The kingdom is actively pursuing its non-oil economy as part of its Vision 2030 diversification agenda.
Meanwhile, the UAE’s economy is expected to grow by 3.4% in 2023, with strong performances in tourism, real estate, construction, transport, manufacturing, and a surge in capital expenditure, as reported by the World Bank.
Analysts also anticipate increased bilateral trade in local currencies, especially following agreements such as the one between the UAE and India to promote the use of local currencies in cross-border transactions.
As Brics expands, there are growing calls for an overhaul of the international monetary system and the development of an alternative currency to the US dollar. Ullas Rao believes that the emergence of a Brics common currency could act as a significant step in diversifying risks away from the dominance of the US dollar.
The expansion of Brics is seen as a significant development in the global geopolitical landscape, with the bloc poised to assume greater influence as a powerful voice for the Global South, according to analysts. The inclusion of Saudi Arabia, the UAE, Iran, and Egypt is expected to foster political cooperation among member countries, while the Arab countries remain committed to improving their global geopolitical influence without detaching from the West.
Source: Arab News