BRICS is looking to overpower the US and Europe by putting local currencies ahead of the dollar for trade. The alliance kick-started the de-dollarization initiative convincing developing countries to end reliance on the US dollar. The global financial order remains on a slippery slope this year with weak macroeconomic factors affecting the sector.
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On the heels of the BRICS de-dollarization threat, the US is facing calls for a recession which could also affect Europe. If a recession hits both the US and Europe, BRICS and other developing countries could benefit the most. Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade.
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BRICS: A Recession On the Cards For US & Europe, Says BCA Analyst
BCA Chief European Strategist, Mathieu Savary has warned that a recession could hit the US and Europe sooner than expected. Savary explained that there’s a growing list of worries where the economy is weakening. He stressed the decline in the ISM manufacturing index and the disappointing labor report to be the cause. On the other hand, the economies of BRICS countries remain strong with less chance of a recession compared to the US and Europe.
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“US manufacturing reflects global growth dynamics. Historically, weakness in the new orders-to-inventories ratio foretells problems for Europe,” said the Strategist. The deteriorating US labor market and the worsening job openings could welcome a recession. Both the stock markets in the US and Europe could crash if a recession hits the economy. BRICS is well-suited to overcome a recession and could take advantage of the decline in the US and Europe’s economies.
The de-dollarization agenda of BRICS could gain steam after the US and Europe enter a recession. Several developing countries could join the chorus and begin using local currencies for cross-border transactions.