Datanomics: Brics, SCO gain ground, but G7 holds the edge in GDP and trade

Putin questioned G7's economic dominance, as new data shows BRICS and SCO nations overtaking the bloc in global GDP share under purchasing power metrics

Russian President Vladimir Putin, during his recent visit to India, questioned the idea of G7 (Group of Seven) nations being the world’s economic powerhouse, pointing to slower growth and recessionary trends in some European economies such as Germany and France. He argued that the economic position of G7 countries was weakening, despite their status as high-tech economies.

 

Chart 1: G7 beats Brics, SCO in GDP…

 

The share of G7 countries in global gross domestic product (GDP) at nominal dollar values has remained almost double that of Brics and the Shanghai Cooperation Organisation (SCO) individually in recent years, even though the G7’s share of world GDP has declined over the past three decades. 

 

Chart 2: …But Brics, SCO trump G7 on PPP

 

However, the purchasing power of a currency is a better indicator to evaluate the economic strength of a country. In purchasing power parity (PPP) terms — which adjust for the ability of local currencies to buy a fixed basket of goods — both Brics and SCO have overtaken the G7 in recent years. Brics’ share of global GDP at PPP surpassed the G7 in 2019, and the SCO followed in 2020. 

 

Chart 3: G7 fares better in trade

 

The G7 continues to dominate global trade. Its share in global exports of goods and services (in nominal dollar terms) remains higher than that of Brics. The gap is even wider in services, where the G7’s share is nearly four times that of Brics.