World Economy

BRICS Can Stabilize,  Boost Global Economy

BRICS Can Stabilize,  Boost Global EconomyBRICS Can Stabilize,  Boost Global Economy

A BRICS group with deepened cooperation will not only serve its five member countries and other developing nations, but also stabilize and even boost the world economy.

The Greek debt crisis, the expected lifting of sanctions on Iran and oil and stock market volatility will dominate the agenda of the BRICS summit which opened in Russia Wednesday, Sputnik reported.

During their two-day meeting in Ufa, the leaders of Brazil, Russia, India, China and South Africa will discuss closer industrial, technological and financial integration of their countries within the five-nation bloc.

The participants will also discuss measures to set in motion the New Development Bank and a $200 billion pool of currency reserves to finance joint projects, including those proposed by Russia’s Rosneft Company.

The summit comes against the backdrop of the deepening debt crisis in Greece, the stock market crash in China and the expected lifting of international sanctions on Iran which has sent oil prices tumbling down.

Leaders of Iran, Belarus, Afghanistan, Pakistan and some other non-BRICS countries will also take part in the summit.

With the international sanctions against Tehran now on the way out, many experts believe that the return of the oil-rich Iran to the world markets may push the oil prices down.

So far their expectations have proved right with crude already dipping by more than 10% over the past few days.

Specific Business Projects

The BRICS countries could move forward to specific business projects in the next 18 months, the director of HSBC Asia Pacific told Sputnik on Wednesday.

"Specific projects is what we would like to move to and I think we would have to give that another year to 18 months, but it is an objective which we have identified in today's meeting," Naina Lal Kidwai said on the sidelines of the BRICS Business Council Meeting.

She stressed that the BRICS economies should be doing more to engage in dialogue at the group's level.

"I am struck by the fact how little of the five countries have actually engaged with each other. There was some bilateral dialogue, but as a group that has not historically been the case. And it is quite interesting to see how forcing it through a forum such as this is actually producing a lot of common platforms for engagement," she said identifying rail and hydropower as some of the most prospectus areas.

She said that another area which needs more attention is small and medium-size enterprises "because we have many common interests in growing entrepreneurship and skills and jobs at our specific countries level."


Capital Markets

The five emerging economies of the BRICS should pay more attention to the development of their financial markets not only within, but also outside the NDB, Lal Kidwai said.

"We are looking at the architecture of the markets, one element is what the NDB is going to do and guiding that, but the important area of the capital market and the financial infrastructure aside from NDB also needs to be looked at," she said.

She stressed the importance of finding ways for BRICS to "collaborate on our capital markets and developing our capital markets," particularly as there are a number of new innovations globally on green bonds and funding renewables.

The NDB was created in July 2014 with an agreement between BRICS member states to mobilize resources for infrastructure and sustainable development projects. BRICS member states have also agreed to establish a $100-billion liquidity reserve to ensure the bank's financial stability.

The NDB was conceived as an alternative to western global financial institutions.

The BRICS summit is underway in the Russian city of Ufa, in parallel to the Shanghai Cooperation Organization (SCO) summit. Both summits will conclude on Friday, July 10.