Expanded BRICS countries' share in global remittance transactions surges by 193%
In August 2023, the BRICS bloc expanded to include six new countries - Egypt, Ethiopia, Iran, Saudi Arabia, the United Arab Emirates, and Argentina (although Argentina later withdrew, leaving the remaining four to join). This brought the BRICS membership from five to nine countries as of early 2024.
The expansion of the BRICS bloc is expected to significantly impact global remittances over the next few years. The amount of consumer remittances sent from the current five BRICS countries is set to grow by 10.4% between 2023 and 2025, while the projected remittances for the BRICS bloc in 2023 is a 193% increase compared to the current five BRICS countries' remittances. This means that the BRICS bloc, now consisting of nine countries, is expected to send $125.2bn in remittances in 2023, with this figure projected to reach $138.9bn in 2025.
The addition of the six new countries will increase the BRICS bloc's remittances by 195% in 2025 compared to the current five BRICS countries. In 2023, the BRICS bloc's remittances will account for 16.2% of all global remittances, rising to 16.9% in 2025. The core five BRICS countries will account for 5.5% of all money sent as consumer remittances globally in 2023.
Lucy Ingham, Head of Content and Editor-in-Chief, stated that the BRICS bloc is becoming an increasingly important source of consumer remittances globally. She also added that the BRICS bloc, with its increasing economic clout, is a powerful contender in the remittance space.
The global consumer-to-consumer payments market is set to grow by 80% between 2023 and 2030, aided in part by ongoing growth in migration. According to the UN IOM World Migration Report, the percentage of people who are migrants globally has grown consistently over the last few decades, rising from 2.87% of the world's population in 1990 to 3.9% in 2020.
While not explicitly stated, a larger, more economically diverse BRICS bloc could influence global remittance flows in several ways. These include changes in migration patterns, the development of alternative payment systems, and increased economic integration among member states. However, challenges and unresolved questions remain, such as maintaining cohesion within the expanded bloc, the impact of Argentina's withdrawal, the status of Saudi Arabia's membership, and the distinction between full members and partners.
In conclusion, while the direct impact on the share of global remittances is not quantified, the expansion of the BRICS bloc could reshape global financial flows, including remittances, by promoting alternative payment systems, fostering South-South migration, and increasing economic integration among member states. For concrete data on remittance shares, further research into country-level remittance statistics before and after the expansion would be required.
In light of the expanding BRICS bloc and its significant increase in remittances, there might be opportunities for financial institutions and investors to explore market sizing in this sector. With the bloc projected to account for 16.2% of all global remittances in 2023, positioning within this market could be financially advantageous. As the bloc moves towards integrating its economies further, investments in alternative payment systems or infrastructure enabling South-South migration could yield promising returns.
