By Yaroslav Lissovolik
The idea of policy coordination among BRICS has clearly become more popular in the past several years and yet there is still a lack of detail and focus with respect to the possible modalities of such cooperation in the sphere of trade and macroeconomic policy. Recent trends in intra-BRICS discussions suggest that there may be some headway in attaining greater policy coordination among BRICS in the trade sphere. In the macroeconomic area, there may be scope to explore coordination in anti-crisis measures, including with respect to how the stimuli from BRICS core economies propagate throughout the BRICS+ circle (including the BRICS regional partners) as well as the broader Global South perimeter. Greater progress on policy coordination in the macroeconomic sphere could be facilitated by strengthening and expanding the mandate of the BRICS Contingent Reserve Arrangement (CRA).
In the trade sphere, the BRICS economies have recently agreed to pursue policy coordination in the WTO. A more specific commitment on the part of the core members of the bloc would be the formation of a common platform in the WTO’s “groups in negotiations” to coordinate common approaches to WTO reform and trade liberalization rounds. As discussed in our earlier publications one of the priorities in the trade sphere for BRICS needs to be the delineation of a road-map of trade liberalization within the BRICS/BRICS+ circle. The role of the BRICS/BRICS+ regional blocs such as the African Continental Free Trade Area (AfCFTA) or Mercosur within the BRICS+ trade liberalization will need to be explored in greater depth, given that trade policy in a growing number of BRICS economies is increasingly delegated from the national level to the level of the respective regional integration blocs.
In the fiscal sphere one of the promising venues for coordination may be discussions on anti-crisis policies as well as the coordination of economic stimuli with the respective regional integration platforms and their development institutions. During an economic downturn core BRICS economies may coordinate their approaches to anti-crisis policies and synchronize their stimuli to deliver a stronger effect on the recovery of the economies of the developing world. Involving regional development institutions in this process together with the BRICS CRA and the New Development Bank (NDB) may streamline economic policy coordination across the main regions of the Global South and amplify the scale of resources available for launching such anti-crisis stimuli.
In the sphere of monetary policy, the current discussions appear to revolve around common approaches to de-dollarization and the use of new payment systems. Greater focus will need to be accorded to the development of CBDCs across BRICS and their inter-operability. Discussions about a common unit of account or a single BRICS currency will need to be accompanied by work on the stability/convergence criteria with respect to macro indicators such as inflation or the volatility of the respective national exchange rates. There may also be scope to explore the modalities of coordinating anti-crisis policies in the monetary sphere during economic downturns, including with respect to such factors as capital account liberalization and international best practice in anti-crisis policies across EM. Finally, there has been some discussion recently on advancing greater financial literacy within the BRICS circle – an area where the BRICS Central Banks could potentially cooperate with substantial benefits for greater financial inclusion.
Overall, trade and macroeconomic policy coordination for BRICS should be prioritized in the coming years, given the mounting risks to the global economic outlook and the notable potential harbored in South-South economic policy cooperation/liberalization. We continue to see the regional integration arrangements of the Global South and their respective development institutions (regional development banks and regional financing arrangements) as the key conduits to a more effective and inclusive economic policy coordination framework across the developing world. Within this framework a strengthened BRICS CRA with an expanded mandate would provide an important institutional support to Global South macroeconomic policy coordination efforts. Greater BRICS policy coordination in the trade and macroeconomic sphere should be conducive to further boosting South-South trade and investment which in turn may lower the susceptibility of emerging market economies to volatile swings in capital flows and monetary policy shifts in the advanced economies.
Yaroslav Lissovolik - Founder of BRICS+ Analytics.
BRICS+ Analytics
