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Saudi Arabia’s Move to Join BRICS Grants it Greater Economic Expansion

A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)
A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)
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Saudi Arabia’s Move to Join BRICS Grants it Greater Economic Expansion

A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)
A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)

Economic analysts have emphasized that Saudi Arabia’s expected move to join the BRICS group as an observer will grant the Kingdom the ability to participate in some of its economic activities.

The group is expected to meet in August.

This move is also expected to strengthen Saudi Arabia’s trade and economic relationships while reaffirming its commitment to global economic openness and the prudent management of economic ties.

Dr. Mohammed Makni, a finance and investment professor at Imam Mohammad Ibn Saud Islamic University in Saudi Arabia, told Asharq Al-Awsat that since its inception, the BRICS group has sought to shift economic power from a single to multiple directions.

The bloc is significant for comprising around 41% of the world's population and 29% of the world’s land area. Additionally, its members are part of the G20, representing the world’s largest 20 growing economies.

Makni further added that Saudi Arabia’s inclusion will open new paths and significant opportunities for the Kingdom’s economy and the Gulf markets, leading to expansion and increased global economic stability.

Saudi Arabia will also play a crucial role among the group’s nations, particularly in the trade of oil and gas, which constitutes 30% of the Kingdom's exports to global markets.

Makni also added that Saudi Arabia is open to all, and its policies are not limited to a Western-oriented approach.

He pointed out that the country had joined the Shanghai Cooperation Organization for Economic and Security Cooperation in March 2022.

This move, Makni emphasized, will not affect the strong relations between Riyadh and Washington, as well as other Western countries.

It serves to affirm the strength and resilience of the Saudi economy and the Kingdom’s capability and wisdom in managing its relationships with various nations while maintaining a balance of interests to achieve the strategic goals of Vision 2030.

Moreover, Makni emphasized that this membership will infuse a new vitality into the economies of the member states amid the ongoing global economic crises and reshaping of economic powers.

It will also create opportunities for the BRICS nations to enter the markets of the Gulf region, especially given the urgent need for the two largest economies in the group, China and India, to access Gulf energy markets in order to sustain growth and move towards global economic leadership.

The BRICS group is a global economic bloc comprising the countries of Brazil, Russia, India, China, and South Africa. BRICS is an acronym derived from the initial letters of these nations’ names.

Currently, South Africa is chairing the group, and it will host the 15th summit of the bloc from August 22 to 24.

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US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
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US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)

The American economy expanded at a healthy 3% annual pace from April through June, boosted by strong consumer spending and business investment, the government said Thursday, leaving its previous estimate unchanged.
The Commerce Department reported that the nation's gross domestic product — the nation's total output of goods and services — picked up sharply in the second quarter from the tepid 1.6% annual rate in the first three months of the year, The Associated Press reported.
Consumer spending, the primary driver of the economy, grew last quarter at a 2.8% pace, down slightly from the 2.9% rate the government had previously estimated. Business investment was also solid: It increased at a vigorous 8.3% annual pace last quarter, led by a 9.8% rise in investment in equipment.
The final GDP estimate for the April-June quarter included figures showing that inflation continues to ease, to just above the Federal Reserve’s 2% target. The central bank’s favored inflation gauge — the personal consumption expenditures index, or PCE — rose at a 2.5% annual rate last quarter, down from 3% in the first quarter of the year. Excluding volatile food and energy prices, so-called core PCE inflation grew at a 2.8% pace, down from 3.7% from January through March.
The US economy, the world's biggest, displayed remarkable resilience in the face of the 11 interest rate hikes the Fed carried out in 2022 and 2023 to fight the worst bout of inflation in four decades. Since peaking at 9.1% in mid-2022, annual inflation as measured by the consumer price index has tumbled to 2.5%.
Despite the surge in borrowing rates, the economy kept growing and employers kept hiring. Still, the job market has shown signs of weakness in recent months. From June through August, America's employers added an average of just 116,000 jobs a month, the lowest three-month average since mid-2020, when the COVID pandemic had paralyzed the economy. The unemployment rate has ticked up from a half-century low 3.4% last year to 4.2%, still relatively low.
Last week, responding to the steady drop in inflation and growing evidence of a more sluggish job market, the Fed cut its benchmark interest rate by an unusually large half-point. The rate cut, the Fed’s first in more than four years, reflected its new focus on shoring up the job market now that inflation has largely been tamed.
Some other barometers of the economy still look healthy. Americans last month increased their spending at retailers, for example, suggesting that consumers are still able and willing to spend more despite the cumulative impact of three years of excess inflation and high borrowing rates. The nation’s industrial production rebounded. The pace of single-family-home construction rose sharply from the pace a year earlier.
And this month, consumer sentiment rose for a third straight month, according to preliminary figures from the University of Michigan. The brighter outlook was driven by “more favorable prices as perceived by consumers” for cars, appliances, furniture and other long-lasting goods.
A category within GDP that measures the economy’s underlying strength rose at a healthy 2.7% annual rate, though that was down from 2.9% in the first quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
Though the Fed now believes inflation is largely defeated, many Americans remain upset with still-high prices for groceries, gas, rent and other necessities. Former President Donald Trump blames the Biden-Harris administration for sparking an inflationary surge. Vice President Kamala Harris, in turn, has charged that Trump’s promise to slap tariffs on all imports would raise prices for consumers even further.
On Thursday, the Commerce Department also issued revisions to previous GDP estimates. From 2018 through 2023, growth was mostly higher — an average annual rate of 2.3%, up from a previously reported 2.1% — largely because of upward revisions to consumer spending. The revisions showed that GDP grew 2.9% last year, up from the 2.5% previously reported.
Thursday’s report was the government’s third and final estimate of GDP growth for the April-June quarter. It will release its initial estimate of July-September GDP growth on Oct. 30.