Bangladesh: BRICS and Western Alliance

​​​​​Md. Badrul Millat Ibne Hannan: The BRICS Summit of heads of state will be held at the Sandton Convention Centre (SCC) in Johannesburg, Gauteng in August 22-24, 2023. The Theme for this year is “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism”. Bangladesh has formally applied to join BRICS on Monday June 19, 2023.

“BRICS” is the acronym denoting the emerging national economies of Brazil, Russia, India, China and South Africa. The term was originally coined in 2001 as “BRIC” by the Goldman Sachs economist Jim O’Neill”.

He is the Economist who has made projection on global economic bloc like-MIKT, MINT and N-11. Here MIKT are the Mexico, Indonesia, South Korea, and Türkiye. MINT is the Mexico, Indonesia, Nigeria and Türkiye.

According to Wikipedia, “Jim O’Neill is best known for coining BRICs. The Next Eleven (known also by the numberonym N-11) are the eleven countries –Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam – identified by Jim O’Neill in a research paper as having a high potential of becoming, along with the BRICS countries, among the world’s largest economies in the 21st century. The bank chose these states, all with promising outlooks for investment and future growth, on 12 December 2005.

Jim O’Neill along with his team showed in research paper No.66 of Global Economics that the forecast for 2001 and 2002 suggested about BRICS and a comparison with G7.

If we compare the present scenario of BRICS with Jim O’Neill’s research paper no.66 of Global Economics, it is many times higher. The current BRICS five now contribute 31.5% of global GDP, while the G7 share has fallen to 30%. The BRICS is expected to contribute over 50% of global GDP by 2030, with the proposed enlargement almost certainly bringing that forward. The five BRICS countries together contribute nearly 32.5 per cent of the global GDP, compared to 30.7 per cent by G7 countries.

BRICS economic development
China has invariably been the largest economy of this bloc, and its rapid growth has seen it become the second largest economy in the world, behind the U.S. It has the largest GDP of the BRICS country, at 16.86 trillion U.S. dollars in 2021, while the others are all below three trillion. Combined, the BRICS bloc has a GDP over 26.03 trillion U.S. dollars in 2022, which is slightly more than the United States. China’s growth has also been much faster than the other BRICS countries; for example, when compared with the second largest BRICS economy, its GDP was less than double the size of Brazil’s in 2000, but is almost six times larger than India’s in 2021.

Since 2000, the country with the second largest GDP has vacillated between Brazil, Russia, and India, due to many factors, although India has handled this position since 2015 (when the other two experienced recession), and it’s growth rate is on track to surpass China’s in the coming decade. South Africa has regularly had the smallest economy of the BRICS bloc, and it has just the third largest economy in Africa; its inclusion in this group is due to the fact that it is the most advanced and stable major economy in Africa, and it holds strategic importance due to the financial potential of the continent in the coming decades.

Arab News has reported that BRICS collectively represent about 27% of world’s geographic areas and are 42% of world’s population. Estimated population lives in about 3.21 billion. Except South Africa, rest four of the BRICS countries are the biggest of the world and have highest population.

The larger part of the production of oil is from BRICS Countries. BRICS will be stronger than previous if KSA joins in it. A news about it by declaration of reduction of oil production by OPEC pressurized by Saudi Arabia. There is strong probability of KSA, Tukiye and Egypt to join in BRICS. About 26 percent of steel & iron, 40 % corns and 46 % wheat are produced by BRICS countries. It has 4.5 trillion combined forex reserve. The entire world GDP’s 32 percent are from five countries of BRICS.

A major part of population of Middle East is in four countries -Iran, Suadi Arabia, Egypt and Turkiye. About 40 percent of total production in Gulf Countries comes from these four countries.

However, after joining Saudi Arabia, about 42 percent of world oil production will be in BRICS. Moreover, if these aforesaid countries join at BRICS, about 40 % of total GDP and 60 percent of consumer market of the entire world will be controlled by it.

Though Reuters has stated on June 02, 2023 that Iran, Saudi Arabia, the United Arab Emirates, Cuba, Democratic Republic of Congo, Comoros, Gabon, and Kazakhstan all sent representatives to Cape Town for so-called “Friends of BRICS” talks. Egypt, Argentina, Bangladesh, Guinea Bissau and Indonesia were participating virtually.

A bank named “New Development Bank” was established in 2015 by BRICS countries – Brazil, Russia, India, China and South Africa. The Bank’s membership is open to members of the United Nations. NDB commenced the admission of its first new member countries in the second half of 2021. Bangladesh, the United Arab Emirates, Egypt and Uruguay have since joined the bank.

Many Economists consider that New Development Bank will be the alternative of World Bank. These reasons are the enough to fight against US dollar and market share of dollar must be replaced by new a currency developed by BRICS. Although we don’t know the name of new currency developed by BRICS till now.

If N-11 joins with BRICS, the present scenario of the entire world will totally be changed. Eastern and its alliance will be minor parts. However, it’s a different geopolitical issue. Among these N-11, Bangladesh is a field changer one. BRICS needs Bangladesh for taking the opportunity to communicate and coordinate regionally with the enormous trade blocs BIMSTEC, ASEAN, and SAARC.

Bangladesh’s natural position is treated as a gateway between South Asia and Southeast Asia. Due to the fact that it shares land borders with Myanmar, which connects southeast and western Asia, and India, a BRICS member and significant player, Bangladesh maintains three seaports. BRICS and Bangladesh have an ideal combination for investment and cooperation. A new horizon of cooperation has emerged as a result of the shifting economic features and government deals to sustainable investment policy. Bangladesh’s present position is suitable for investment and cooperation with the BRICS. Bangladesh’s geostrategic location is a vital factor for BRICS to consider for membership. These locations are most important for connecting China, India, and Russia to another member of BRICS.

In the calculation, the following factors should be considered for the greater interest of Bangladesh:
According to the U.S. Census Bureau’s 2018 American Community Survey, there were 213,372 people of Bangladeshi origin living in the US. Around 100,000 Bangladeshi-origin people are living in Canada.

In the 2021 census there were 644,900 Bangladeshis in England and Wales, forming 1.1% of the total England and Wales population.

The 2021 Census recorded more than 51,000 people born in Bangladesh living in Australia, up from 41,233 in 2016 and 27,808 in 2011.

According to the International Migrants stock 2020 by UNDESA4, a total of 456,516 Bangladeshi nationals resided in Europe in 2020. Number of Bangladeshi nationals residing in Japan: 20,954 (June 2022).

A total of 15,983 Bangladeshi migrants live in South Korea, among whom 10,533 migrants are laborers (Ministry of Justice, 2018).About 2,000 Bangladeshi live in Russia.

Actual data has not found that how many Bangladeshi live in China. But undocumented data was found about Bangladeshi live in India. There are about 300,000 (2020) Bangladeshis in South Africa.

Bangladesh Bank shows the statistical data about remittance inflow that the amid the growth uncertainty and elevated inflation worldwide that adversely affected migrants’ real income and their remittances, Bangladesh’s remittance inflows stood at USD 5541.82 million during January-March 2023 which was 14.97 percent and 9.55 percent higher than that of the previous quarter and the same quarter of the previous year respectively.

The highest amount of remittance received from UAE that was USD 867.31 million (15.65 percent of total remittances), followed by KSA (15.41 percent), USA (15.06 percent) and United Kingdom (10.00 percent) in the third quarter of FY23.

Beside this expatriates’ remittance, maximum export remittance comes from USA and its ally countries. FDI, foreign grants and loans’ scenario are -the country received a net FDI of $1.67 billion in the January-June period of 2022 according to central bank data. The total net FDI from the USA in FY22 was $661.12 million, which was 19.2% of the total FDI inflow to Bangladesh.

China was the second-highest source of FDI, with a total net FDI of 465.17 million, or 13.5% of the total FDI, coming from the country in the last fiscal, followed by the UK with 11.2% share, and Singapore with 8.7% share among the top five countries. Foreign aid scenario of 2021-2022 FY is -Asian Development Bank (ADB) topped the fund disbursement list with $2.57 billion.

Besides, it had almost disbursed all its budgetary support for this fiscal year, as a result of which the total amount has increased. and Japan is the second biggest financial support provider with $2.20 billion. The third highest amount, $1.67 billion, was lent by World Bank. China came fifth, with the amount lent being $1 billion.

Highest trade deficit of Bangladesh is with India, and China which means Bangladesh exports a little to India and China but imports a larger quantity from these two countries. This means two countries are a big beneficiary of Bangladesh.

Moreover, Bangladesh has been availing supports from G7 countries since long. On the other hand, Bangladesh may avail from BRICS in near future.

The recent context of the global economy does not reflect a healthy atmosphere; rather, it is now concrete evident that the global economy is experiencing a substantial amount of hardship that is affecting every country in the world. So, Bangladesh should go with BRICS carefully along with win-win negotiation.

Analyst: Md. Badrul Millat Ibne Hannan, MPA, AIS (DU), CFC (IFC, Canada), ACCA (Final Level) & Officer, Islami Bank Bangladesh Limited.