BRICS+ nations are better prepared to manage future economic challenges than G7 nations: E&Y
Oct 02, 2024
New Delhi [India], October 1 : The BRICS+ group of countries are better placed to fiscally combat any future major economic crisis, as the countries in the BRICS+ group have a lower debt-GDP ratio, highlighted a report by Ernst & Young, an international consultation firm.
The report says that BRICS+ nations are placed at a stronger fiscal position than the G7 countries because they have a lower debt-GDP ratio and benefits of having access to higher primary deficits and a nearly equal excess of growth over interest rates.
"BRICS+ group is better placed to fiscally combat any future major economic crisis as it has a lower debt-GDP ratio, access to higher primary deficit, and a near equal excess of growth over interest rates as compared to the G7 group," said the report.
The report emphasized that both the G7 and BRICS+ groups are crucial in shaping global economic trends. While G7 nations holds a larger share of global GDP when measured at market exchange rates, the BRICS+ group has a significant and growing share when evaluated in terms of Purchasing Power Parity (PPP).
It added that by 2029, BRICS+ is projected to have a 29.2 per cent share of the global GDP in market exchange terms and 38.3 per cent in PPP terms. In comparison, the G7's share is expected to be 42.4 per cent in market exchange terms and 27.5 per cent in PPP terms.
The report highlighted that over the years, the G7's share of global GDP has steadily declined. In 2002, the G7 accounted for 64.4 per cent of global GDP, but this has fallen to an estimated 44.4 per cent in 2024, a decline of 20 percentage points.
According to International Monetary Fund (IMF) projections, the G7's share is expected to drop further to 42.4 per cent by 2029.
On the other hand, the BRICS+ group has seen its share of global GDP rise significantly. In 2002, BRICS+ accounted for just 10.1 per cent of the world economy, but by 2024, this figure had grown to 27.3 per cent, an increase of 17.2 percentage points. By 2029, BRICS+ is projected to increase its share to 29.2 per cent.
The E&Y report says while the G7 group continues to play a significant role in global economic affairs, the BRICS+ countries are steadily gaining ground, particularly when measured in PPP terms.
It concludes that the BRICS+ nations are better prepared to manage future economic challenges due to their more favourable fiscal conditions.
