The BRICS Expansion: What a Growing Economic Bloc Means for Global Trade

The BRICS bloc—originally Brazil, Russia, India, China, and South Africa—has undergone its most significant expansion since inception, adding new members that reshape the group's economic and geopolitical weight. This enlarged coalition now represents a substantial share of global GDP and population, challenging the post-World War II Western-led international order.

The Expansion

At the August 2023 summit in Johannesburg, BRICS invited six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. Argentina later declined under President Milei's administration, but the remaining five joined in January 2024.

The addition of Saudi Arabia and the UAE brings major oil producers into the fold, while Egypt provides strategic control of the Suez Canal. Ethiopia represents African demographic growth, and Iran adds geopolitical complexity despite Western sanctions.

Dedollarization Efforts

A key BRICS initiative involves reducing dependence on the U.S. dollar for international trade. China's Cross-Border Interbank Payment System (CIPS) now links 4,800 banks across 185 countries. Bilateral trade agreements increasingly settle in local currencies—Russia-China trade in yuan and rubles, India-Russia trade avoiding dollar intermediation.

However, a true BRICS currency remains aspirational. The vastly different economic structures, inflation rates, and political systems of member states make monetary union impractical. Instead, the bloc focuses on payment system alternatives and commodity trading in non-dollar denominations.

Implications for Global Trade

The expanded BRICS creates parallel trade and financial infrastructure that could reduce Western leverage from sanctions and financial system control. The New Development Bank (BRICS bank) provides development financing without IMF/World Bank conditionality. Bilateral swap lines reduce dollar dependency.

For businesses, this fragmentation requires navigation of multiple payment systems, regulatory frameworks, and geopolitical considerations. Supply chains increasingly must account for bloc alignments alongside pure economic efficiency.