Brik pon brik… brik pon brik… Remember that Skillibeng song? 

Well, this isn’t a video to dissect that song but we SHOULD talk about a new bric and how it could affect you and your money.

Remember a few weeks ago when we talked about China and Brazil’s new trade deal? Both countries have agreed to trade in their own currencies and cut out the US dollar as the middleman. You can check that video for a more detailed explanation.

Well, this trade agreement is actually a bigger deal than most people realise because it could be a sign of bigger things to come.

See China and Brazil are members of the BRICS, which is just an acronym that stands for Brazil, Russia, India, China and South Africa. These countries are considered to be some of the world’s fastest-growing economies. I mean China is already the second-largest economy in the world. 

The term BRIC- without the S- was coined by an economist in 2001 and South Africa was added in 2010. The idea behind the grouping is that these economies will dominate the global economy by 2050.

Essentially, they’re trying to become the next G7, which are the current leading economies. 

But why is this important and how will it affect you and your money? 

Well, remember how I said China and Brazil had cut the US dollar out as the middleman with their trading? The BRICS nations are trying to establish their own currency to use for trade. 

If that happens, it will seriously undercut the value and importance of the US dollar. Right now the US dollar is the main global reserve currency, which means most countries conduct trade using the USD. 

And because there are hundreds of countries conducting trade daily, there is always a high demand for US dollars. This in turn keeps the value of the US dollar relatively high. It’s the whole issue of supply and demand; when the demand is high and supply is short the price increases.

BUT! If the BRICS currency takes off then the demand will shift to that. 

Just think about many things are imported from China around the world! And Russia is a major source of oil and natural gas. Trading with these countries is almost unavoidable. 

And if they say ‘hey, you need our BRICS currency to do business with us’ then of course countries are gonna go out and get that currency. That will drive up the demand for BRICS currency and slash the demand for the USD.

Then that scenario is gonna have ripple effects, especially here in Jamaica, cause we know, “If America sneeze, Jamaica ketch a cold.”

Without a heavy demand for the USD, its value will be weakened. A weakened US dollar would be good and bad for Jamaica. 

It would mean cheaper imports from the US, which is one of Jamaica’s top trading partners. But it could also result in a dip in remittances. Remittances can make up between 20 to 25 percent of Jamaica’s GDP. Which is a lot… So a hit to remittances would really impact us. 

On the other hand, it would mean more expensive imports from China and Jamaica does a lot of business with China.

There’s no need to panic right now, the US is still the world’s largest economy and the BRICS nations have a ways to go before dethroning the G7. Plus Russia is still waging war against Ukraine, which has put a serious dent in their economy. So, it’s a “we’ll see” type of thing.

How do you guys feel about it? Are you scared, excited, or anxious? Let me know in the comments. Let’s get this money.