Al Ula Conference For Emerging Market Economies: Opening Remarks
IMF News, February 16, 2025
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- Published: February 16, 2025
Overview
- Event: Al Ula Conference For Emerging Market Economies — Opening Remarks.
- Speaker: IMF Managing Director.
- Location and date: Maraya Conference Hall, Al Ula, Saudi Arabia; February 16, 2025.
- Purpose: Identify issues facing emerging markets and how they can best address them amid sweeping global transformations in technology, demography, and geopolitics.
Key risks and opportunities for emerging markets
- Global environment:
- Technology revolution, notably AI, "is upon us" and is "set to transform the way we live and work, with massive impact on jobs as early as the next five years."
- Trade dynamics have shifted: global trade and global GDP are "now growing at roughly the same rate (and trade even lags behind)."
- Geopolitical and policy shifts: "the new US administration has been clear that it intends to take action in the areas of trade, tax and spending, deregulation, immigration, and digital assets."
- Performance and contribution:
- Emerging economies "have weathered the shocks of the past few years remarkably well."
- Emerging economies "have delivered two thirds of global growth."
Three areas to watch (highlighted for the next years)
- Inflation and monetary policy:
- "Inflation is expected to go back to target levels faster in advanced economies than in most emerging markets."
- A stronger US dollar "could trigger capital outflows," complicating monetary policy for emerging economies.
- Fiscal pressures:
- Many emerging economies face "high debt, limited fiscal resources, and mounting spending pressures" — described as a "challenging triple threat."
- Caution against relying on fiscal stimulus ("sugar rush") that "provides temporary growth" but "often fuels inflation and financial turbulence."
- Recommendation: focus on "the efficiency of the engine" rather than stepping on the gas pedal.
- Structural reforms and productivity:
- Structural reforms are "critical" to improve competitiveness, increase productivity, and enhance growth prospects.
- Slow productivity growth "accounts for more than half the global growth slowdown in recent decades."
- Quantified potential: "If countries narrow their overall productivity gaps with the United States by just 15 percent, that would add 1.2 percentage points to global growth."
Policy recommendations and priorities
- Preserve or restore macroeconomic and financial stability to enable growth.
- Use stability as a platform to pursue reforms that boost productivity.
- Double down on policies known to lift productivity, including:
- Cutting red tape.
- Increasing competition.
- Encouraging entrepreneurship.
- Search for promising new ideas and approaches to jumpstart growth in emerging markets.
- Emphasize cooperation:
- Value in countries working together and in new forms of cooperation "based on areas of common interest" or geography.
- Quote underscoring cooperation: Minister Aljadaan — "Working together to fix our global economic ship so it benefits more people is not a charitable act; it is a wise investment in our common future."
IMF actions and engagement
- IMF is forming an "IMF Advisory Council on growth and entrepreneurship."
- Minister Sturzenegger of Argentina agreed to serve on it.
- The IMF expects "deep engagement with this new Council to find ways in which economies can be stronger for their people."
- The IMF's new Regional Office in Riyadh, supported by Saudi Arabia, contributed to organizing the conference and turning Minister Aljadaan’s vision into a reality.
Tone and closing
- Call for agility, adaptability, and resilience in emerging economies as "ingredients for future success."
- Encouragement to remain determined, engaged, and positive: "Together we can do well for our member countries and for their people."
- Greetings used: "Al salam Alaikum!" and "Shukran!"
Source: Al Ula Conference For Emerging Market Economies: Opening Remarks, IMF Managing Director, Maraya Conference Hall, Al Ula, Saudi Arabia, February 16, 2025.