Bangladesh and BRICS: A potentially game-changing partnership

BRICS collectively represent about 27% of the world’s geographic areas and 42% of the world’s population. Photo: Reuters

On 19 June 2023, Bangladesh formally applied to join BRICS, the economic bloc of emerging national economies consisting of Brazil, Russia, India, China and South Africa. The term was originally coined in 2001 as 'BRIC' by Goldman Sachs economist Jim O'Neill.

O'Neill has also made projections on other global economic blocs having a high potential along with the BRICS countries, like - MIKT (Mexico, Indonesia, South Korea and Turkey), MINT (Mexico, Indonesia, Nigeria and Turkey), and N-11 (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam).

The BRICS Summit of heads of state will be held at the Sandton Convention Centre (SCC) in Johannesburg, Gauteng between 22-24 August 2023. The theme for this year is "BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism". 

BRICS economic development

China has invariably been the largest economy of the BRICS bloc, and its rapid growth has seen it become the second largest economy in the world, behind the United States. It has the largest GDP of all the BRICS countries, with $16.86 trillion in 2021, while the others are all below three trillion. 

China's growth has also been much faster than the other BRICS countries; for example, in 2000, its GDP was less than double the size of Brazil's, but in 2021 it was almost six times larger than India's which is now the second largest economy in the bloc. 

Since 2000, the position of the second largest GDP has vacillated between Brazil, Russia and India, due to many factors. Since 2015, India has steadily held this position (since the other two experienced recession), and its growth rate is on track to surpass China's in the coming decade. 

South Africa has regularly had the smallest economy in the BRICS bloc, and is 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.

Combined, the BRICS bloc had a GDP of over $26.03 trillion in 2022, which is slightly more than the US. Arab News has reported that BRICS collectively represent about 27% of the world's geographic areas and 42% of the world's population. About 26% of steel and iron, 40% of corn and 46% of wheat are produced by BRICS countries. It has a $4.5 trillion combined forex reserve. 

The larger part of oil production is from the BRICS countries. If Saudi Arabia joins, it will stand to further strengthen the bloc, in which case about 42% of the world's oil production will be in BRICS. 

There is also a strong chance that Turkey and Egypt will join BRICS. Approximately 40% of the population of the Middle East is from the four countries of Iran, Saudi Arabia, Egypt and Turkey. And if they join, then BRICS will have about 40% of the world's total GDP and control 60% of the world's consumer market.

Reuters stated on 2 June 2023 that Iran, Saudi Arabia, the United Arab Emirates, Cuba and the Democratic Republic of Congo, Comoros, Gabon and Kazakhstan all sent representatives to Cape Town for the 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 the BRICS countries. 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 predict that the New Development Bank will be an alternative to the World Bank.

What BRICS stands to gain from Bangladesh

If N-11 joins BRICS, the present scenario of the entire world will change. Among these N-11, Bangladesh is a game changer. BRICS needs Bangladesh to take on 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 a significant player – and Bangladesh maintains three seaports. 

BRICS and Bangladesh have an ideal potential for investment and cooperation. 

A new horizon of cooperation has emerged as a result of the shifting economic features and government deals for sustainable investment policy. Bangladesh's present position is suitable for investment and cooperation with the BRICS. 

Bangladesh also has a significant portion of its population working and living abroad. Bangladesh Bank shows the statistical data about remittance inflow and despite the growing uncertainty and elevated inflation worldwide that adversely affected migrants' real income and their remittances, Bangladesh's remittance inflows stood at $5541.82 million during January-March 2023 – which was 14.97% and 9.55% higher than that of the previous quarter and the same quarter of the previous year respectively. 

The highest amount of remittance was received from UAE which was $867.31 million (15.65% of total remittances), followed by KSA (15.41%), the US (15.06%) and the United Kingdom (10%) in the third quarter of FY23.

Besides expatriate remittance, the maximum export of remittance comes from the US and its ally countries. 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 US 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 year, followed by the UK with an 11.2% share, and Singapore with an 8.7% share. 

During the 2021-2022 FY, Asian Development Bank (ADB) topped the financial aid fund disbursement list with $2.57 billion. It has almost disbursed all its budgetary support for this fiscal year, as a result of which the total amount has increased. 

Japan is the second biggest financial support provider with $2.20 billion. The third highest amount, $1.67 billion, was lent by the World Bank. China came fifth, the amount lent is $1 billion. 

The 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 big beneficiaries of Bangladesh. 

Moreover, Bangladesh has been availing facilities from G7 countries for a long time. On the other hand, Bangladesh may benefit from BRICS in the near future.  

The current context of the global economy does not reflect a healthy atmosphere; rather, it is 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, strategically, for a win-win outcome. 

Md. Badrul Millat Ibne Hannan is a banker at Islami Bank Bangladesh Ltd. [email protected] 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.