IMF confirms geoeconomics power shift

Gross Domestic Product is a broader measure the IMF applies in evaluating performance of the Globe as a whole and individual countries. Its recent forecast for the year 2024 confirms that there is an appreciable power shift in geoeconomics. The winner: Global South

Firstly the Global GDP is calculated as USD 185.677 Trillion for the year 2024 by the IMF. There are ten major countries for whose details appear to be somewhat representative of the growth trend. Out of which both Global North and Global South have five countries each.

Let me give you an interesting table of the Global North as hereunder in three departments:

Country         GDP in USD in Trillion       Percentage of the Global GDP

USA                         29.170                                      15.71

Japan                        6.570                                        3.53

Germany                    6.020                                        3.24

France                        4.360                                        2.34

UK                             4.280                                        2.30

Total                        50.400                                      27.14 (rounded up figure)

 

Let me turn to the Global South performance in similar manner:

 

Country         GDP in USD in Trillion       Percentage of the Global GDP

China                        37.070                                       19.96

India                         16.024                                         8.63

Russia                        6.910                                         3 72

Brazil                         4.702                                         2.53

Indonesia                   4.661                                         2.51

 

Total                         69.367                                       37.35

Not only the there is big overlap in terms of volume but the uptick in percentage of the Global share by the Global South is indeed staggering. If this trend continues the Global North would find it hard to compete with the Global South in geoeconomics power spectrum. What is going wrong with the Global North?

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

BRICS, what it stands for?

There is confusion confounded when it comes to the question of what BRICS stands for. The western narrative dismisses it as some king of club or duplicate of global institutions originally founded by them. Here are my gleanings of what it stands for:

Firstly, small is beautiful is not in the grain of this alliance. So far those countries that are deemed as full members or partners are in fact, some of the largest and strongest in the geoeconomics stage. By extension these countries matter a lot in terms of trade & investment flow and having a huge domestic market to cater to.

While many are fully industrialized in terms of production capacity such as China, Russia and India dubbed as ‘RIC’ the rest is primed for long term manufacturing and export orientation such as Malaysia. There are two trends seen amongst the members & partners. One relates to the need for upgrading technology the other relates to expanding economic relationship with fellow members/partners as an astute business strategy.

Population is yet another feature that distinguishes BRICS from many other Western organizations. China, India Indonesia, Nigeria are countries where teeming population tend to aglow as regards to opening of speedy industrialization and economic prowess.

Many are civilizational states, where the historical grandeur runs as major strand. China, India, Russia, Iran, Egypt, Ethiopia along with Turkey take pride in their rich history and remarkable civilization to boost their stature and are better paced to contribute towards social cohesion and geoeconomics for members as well as to the wider globe.

Fossil fuel and natural gas as an economic tool is abundant in a number of BRICS players. Russia, Iran, Kazakhstan, Nigeria accompanied mainly by UAE and to some extent by Algeria are able to pull the strings when it comes to the energy sector both in exploration and trading. Though this is not a sole feature to identify BRICS as giant store of fuel wealth, in time to come with the denudation of Western based coal mines and USA shale oil this wealth could become an important arbiter.

Dependence, interdependence and multi dependence are joined in the hips of all these countries in BRICS alliance. As regards to technology some are dependent on other members. China depends on Russian energy whereas Russia depends on the bailout for trade and financial transaction that are currently denied to her due to Western sanctions speaks volume on the aspect of interdependence.

Multi dependence runs throughout the entire alliance in several spheres to wit: direct capital investment, technology transfer, diversification of the core economy, speed road & railway networking, establishing mutual alliance and co-operation in social, human resource development and to a great extent fostering cultural & political relationship wide across the membership.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

Iran business strategy, quantum change

Recent announcement of Iran exporting her oil from outside Persian Gulf ports is a tantalizing news. Persian Gulf in general and Strait of Hormuz in particular could function as chokepoint for her and equally for her enemies.

Bypassing Strait of Hormuz is not an easy task. More than 90% of Iranian oil exports are routed through Kharg Island oil terminal that can be interdicted by alien navies. This is a two way sword. Iran can also hit back by closing her side of the narrow Strait whose ownership is shared by both Oman and Iran. At the narrowest point the Strait is only 33 km wide and mainly on the Iranian side!

Technically both Oman & Iran own the Strait equally. The attempts by USA to make it an international waterway has failed due to objections from both Oman & Iran. Yet another crucial point is the Strait of Hormuz is located at the juncture of the Persian Gulf and the Gulf of Oman. Neither Oman nor Iran would agree to any alteration of the status or ownership of the Strait.

Business strategy of Iran as regards to her oil export has to calibrate with judicious use of ports as well as pipeline. At present most pipelines link Kharg Island terminal and a cluster of other small ports in the Hormozan Province in the south-west Iran. Incidentally all are linked to the Persian Gulf.

If Iran has to proceed with the use of ports outside Persian Gulf she has to cough up heavy capital expenditure for laying of pipelines. According to S&P Global the 1,000-km pipeline Known as Goureh-Jask route costing over US$ one billion will bring oil from the Southern Bushehr province to the Iranian coast washed by Sea of Oman. At present the quantum is just above one million barrels but could be expected to go up to 10 million barrels of crude.

Although it is just a minuscule, in the longer term Iran need to diversify export of oil not only from the Gulf of Oman but from the Arabian Sea as well. Chabahar Port is one such well known ports and many many others could be built provided Iran can marshal huge amount of finance. Iran, however, is determined to do that come what may!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist