Deerminants Of Current Account Balances Of Brics

BRICS organization serves as a cooperation platform for the major emerging economies including Brazil,Russia,India,China and South Africa.According to the World Bank data,in 2016 BRICS combined GDP comprised 22% of the world's GDP,which reflects the scale of the alliance.International trade is one of the pillars of the organization's framework.In our research we aim to analyze recent trends in the trade development of the BRICS countries,more specifically we analyze empirically which major economic indicators and to what extent affect the Current Account balance of BRICS.As Current Account balance is a crucial indicator,which reflects the performance of the country's economy,investigating this aspect gives us a deeper understanding of the economic development of BRICS.In the presence of the Global Imbalances,it is very important to understand how BRICS countries must develop their international trade.According to the estimates of IMF in 2016 only China and Russia out of the organization had current account surplus.Hence,based on our research findings,we attempt to develop policy implications for the above-mentioned countries,which could help to improve countries' economic performance.We are undertaking a panel regression analysis which combines Current Account indicators of the five member-countries as the dependent variable and investigate the impact of four explanatory variables.According to our findings,domestic output growth,money supply and real effective exchange rate are crucial determinants of Current Account balances of BRICS,while trade openness has no significant impact.Understanding the causal connections gives us a foundation for the policy perspectives in terms of imbalance correction.