February 5, 2024 - 11:00am
Two major recent stories appear to confirm the rising power of Brics+. Last week the International Monetary Fund (IMF) released its projections for GDP growth in all the major economies. Possibly the most surprising finding was that the Russian economy is growing faster in 2024 than any of its Western counterparts — having outperformed all of them in 2023.
The Financial Times responded this weekend by running a long piece exploring Russia’s economic endurance. “The regime is resilient because it sits on an oil rig,” Elina Ribakova, a non-resident senior fellow at the Peterson Institute for International Economics, told the paper. “The Russian economy now is like a gas station that has started producing tanks.” This comment was a riff off the famous saying, popularised by the late senator John McCain, that “Russia is a gas station masquerading as a country.”
Ribakova cannot have it both ways: Russia is either a gas station or it is a serious industrial economy capable of mass-producing advanced weaponry in a way that many Western economies no longer can. Last summer, for example, the German arms maker Rheinmetall, which produces the Leopard II tank, stated that it could not commit to orders coming from Ukraine due to production bottlenecks.
Around the same time as the IMF report, it was announced that Iran’s exports of crude oil had grown by roughly 50% to 1.29 million barrels per day. This puts Iranian oil exports back to where they were a decade ago, before the Trump administration imposed sanctions in 2019. Most of the increase in purchases of Iranian oil came from China. Iran’s economy appears to have picked up pace too. The IMF put the country’s economic growth at 5.5% in 2023, up from 3.8% in 2022 and higher than any rate since 2016.
What we are seeing before our eyes is the continuing rise of Brics+. When Brics countries announced an expansion last year, it was widely dismissed as a sideshow in which leaders wouldn’t be able to agree on anything. Yet here we are in 2024, with Russia outpacing all the Western economies and Iran surviving sanctions due to the new trade relations within Brics+. Other large Brics+ members such as India are also growing rapidly, with 6.7% growth in 2023 and 6.5% projected in 2024 (Brazil, however, looks set to stagnate).
Adding Beijing to the equation makes the picture even gloomier. After a year of Western commentators saying that China was sluggish and would not meet its growth target, the country announced in December that it had exceeded it by 0.2%. This is lower growth than China had in the past but still the fourth-highest rate of GDP growth among the IMF-listed countries. The Chinese economy is certainly facing problems of its own, but the current outlook hardly marks a major crisis (despite predictions to the contrary).
Many of the Brics+ countries still have major issues that they need to overcome. The most obvious of these are demographic, with the birth rates in most countries falling. But this is a global problem from which we are not exempt. China will also have to make more aggressive moves to boost consumption and stop relying so much on investment for economic growth. To ignore these problems might veer in the direction of excessive optimism, but to insist that they will result in imminent collapse is not tenable.
Right now, it feels like we are in a Brezhnev era of sorts, projecting our economic problems onto others. But as these recent developments indicate, this cannot last forever. Western countries urgently need to formulate a strategic plan for economic development in this different world. Until then, they will be locked in a cycle of self-deception.
Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics
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SubscribeHas anyone else heard about the one where we fund domestic renewable energy sources to stop us having to fund the rise of countries like Iran and Russia?
Some people have been talking about it for decades but it has always been dismissed as green, woke, crusty etc. idealism.
I’m starting to think they may have been onto something. Especially because China seems to be getting really into it.
We don’t need renewables to stop using oil and gas from rogue dictatorships. We have plenty of oil and gas of our own. (That’s not to say we shouldn’t be investing in renewables as well).
Transmission, storage and vulnerability of storage and transmission are ignored until gas pipelines are blown up. The SOE in WW2 were able to achieve vast damage by destroying a few crucial parts of infrastructure but these lessons have been forgotten by the West.
Fair enough – I just hope that the private operators who will exploit those resources see the value in limiting supply to the domestic market rather than selling on the open global one.
They could be instructed to do so. In most other countries, putting the essential needs of the home population first would be considered normal.
I think he’s being sarcastic.
The problem being that most of the gear we use for the renewables comes from China so we’re no better off
Does anyone know how to cancel my subscription to UnHerd without using apps which I don’t do.
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It seems there is an option on the “Help” tab in “my account” to at least send a message to the support team in respect of your subscription.
I have just sent one saying I would like to cancel and do not want the subscription to autorenew.
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Ribakova cannot have it both ways: Russia is either a gas station or it is a serious industrial economy capable of mass-producing advanced weaponry in a way that many Western economies no longer can.
Wanting it both ways is the hallmark of such people. In the US, we’re told how wonderful the economy is, yet anyone can see how ridiculous that claim is. Each month’s job report citing the creation of “new” positions is, without fail, revised downward shortly thereafter. The only growing industry is govt, the one that produces nothing.
Western countries urgently need to formulate a strategic plan for economic development in this different world. — we used to practice this thing called capitalism, which relied on markets instead of appointed and elected central planners with no skin in the game. Economic freedom has also been a historical precursor to political freedom, but freedom itself has fallen out of favor with the managerial class these days.
I’ll be happy if western countries simply abandon their plans for net zero degrowth.
“we’re told how wonderful the economy is, yet anyone can see how ridiculous that claim is”
The Biden economic miracle, saving the US from the wasteland that Donald Trump’s disastrous administration had left behind, is really making you sad, isn’t it?!?!?
Anyone can see? Not you apparently!
“None so blind as those who will not see” True CS; trouble is we are still trying to see who are the “they”.
Both of these countries are starting from a very low base, so any small increases will look much higher in percentage terms. Iran and Russia were both hit with sanctions that caused economic slowdowns, so any minor improvement (Iran selling more oil to
China, Russia ramping up state manufacturing of weapons) is going to show much more heavily than western nations starting from a much higher footing.
I’m not saying the economies of the west are going swimmingly, but let’s not pretend they’re likely to be replaced by Russia and Iran any time soon
How long is this author going to continue doubling down on his delusional nonsense about geopolitics ?
Does he really believe that China/Russia and Russia/Iran are long term allies and not historic enemies ?
I thought Argentina was part of this so-called BRICS+/Global South figment of the imagination. Not looking that way now. Not that it matters since none of it is real anyway.
The perfect response from our right wing friends!
Argentina was invited, but Milei isn’t interested.
War and rumours of war make for strange bedfellows.
Indeed it is. Historians will see Russian sanctions as the fork in the road for the BRICS high way. American hubris sitting on 32 trillion debt is fascinating to watch. Mind you, people in glasshouses ….
I wonder when our leaders will realise that people in other countries are no more demons than we are, and friendship and tolerance of different ways to live, will work better than confrontation.
Russia and Iran are in a different category to China. The West has a vested interest in weakening the former two, but it can’t weaken China too much (they do after all produce all out “stuff”).
“all our stuff” – you’re right! Far more than just washing machines. I cannot current foresee Biden stopping Xi Jinping waltzing into Taiwan. HongKong businesses did virtually nothing to stop the their take-over.
Would Trump stop them though?