UAE and Saudi Arabia set to raise the influence of BRICS bloc globally

The United Arab Emirates and Saudi Arabia, in addition to Iran, Ethiopia and Egypt, joined the BRICS grouping on January 1, doubling its membership to 10. The bloc’s original members remain Brazil, Russia, India, China and South Africa.

Experts believe the group’s expansion to include the Gulf Cooperation Council (GCC) nations is expected to offer new investment opportunities for the region’s two largest economies and boost the bloc’s international influence as well.

Economic diversification seeks the limelight

“Both Saudi and the UAE as [among] the richest countries on per capita and home to the biggest sovereign wealth funds, create enormous growth opportunities through investments, trade and commerce,” said Ullas Rao at Edinburgh Business School of Heriot-Watt University.

Despite global uncertainties including geopolitical tensions, high interest rates and inflation, the two Gulf states have continued to post economic group. Saudi Arabia’s economy grew by 8.7 in 2022 and is expected to expand by 0.8% in 2023, as per the International Monetary Fund.

The Kingdom has also been focusing heavily on its non-oil economy, paying attention to its Vision 2030 diversification agenda. Meanwhile, the neighbouring UAE is expected to grow 3.4%, amid oil GDP growth projected at 0.7% and non-oil GDP at 4.5%.

The country is expected to record strong performance in tourism, construction, real estate, transport, manufacturing and a rise in capital expenditure, as per the World Bank. It is focusing on signing 26 notable agreements as it seeks to strengthen ties with countries around.

Development of alternative currency to US dollar

In addition, the joining of two major oil exporters is expected to reinforce the BRICS group’s bargaining power and influence in OPEC+, which has been playing a crucial role in balancing oil markets. It includes some of the biggest crude producers, including Russia.

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As the prominent grouping doubles in size, the calls for the overhaul of the international monetary system and the development of an alternative currency to the US dollar are also expected to grow, according to Mr Rao.