Al Ula Conference For Emerging Market Economies: Opening Remarks
February 16, 2025
Al salam Alaikum! Hello everyone and welcome!
Let me start by thanking Minister Aljadaan and the Kingdom of Saudi Arabia for hosting us in beautiful Al Ula. I also want to express my deep appreciation for Minister Aljadaan’s role as chair of the International Monetary and Financial Committee (IMFC), where his leadership is critical to the work and effectiveness of our institution.
Minister Aljadaan not only identified a gap in terms of space for emerging markets to discuss policy issues of common interest but decided to close it — and I am delighted that the IMF’s new Regional Office in Riyadh, supported by Saudi Arabia, has played a very important role in turning Minister Aljadaan’s vision into a reality. Here we see an impressive gathering of representatives from all around the world, with one objective: to identify issues that emerging markets face and how they can best address them.
Now is a time of sweeping transformations in the global economy, in terms of technology, demography and geopolitics, creating a more challenging and uncertain environment for policymakers everywhere, with some specificities in terms of both risks and opportunities for emerging economies.
We know, for instance, that trade is no longer the engine of growth that it used to be—unlike the decades of the 1990s and 2000s when global trade grew much faster than global GDP, the two are now growing at roughly the same rate (and trade even lags behind). When global trade slows down, opportunities for regional and cross-regional trade become more important.
We also know that governments around the world are shifting policy priorities: 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.
And the technology revolution—especially AI—is upon us, set to transform the way we live and work, with massive impact on jobs as early as the next five years.
What does it all mean for emerging markets? These economies have weathered the shocks of the past few years remarkably well. And your economies have delivered two thirds of global growth.
But the recipes of the past may no longer provide the path to prosperity. Emerging economies will need to be agile, adaptable and resilient—these will be the ingredients for future success.
Looking into the next years, I will highlight three areas to watch.
First, 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. This makes monetary policy more complicated for emerging economies.
Second, like in advanced economies, many emerging economies are dealing with high debt, limited fiscal resources, and mounting spending pressures—a challenging triple threat. Too often, countries use fiscal stimulus to boost short-term domestic demand. While this “sugar rush” provides temporary growth, it often fuels inflation and financial turbulence. In the current environment, stepping on the gas pedal is not the solution — instead we need to focus on the efficiency of the engine.
This takes me to my third point — the critical importance of structural reforms to improve competitiveness, increase productivity and enhance growth prospects.
At the IMF, we are known for our dedication to macroeconomic and financial stability. Yes, it must be preserved or restored to enable growth. But it also must be utilized to pursue reforms, especially those that can boost productivity. Slow productivity growth accounts for more than half the global growth slowdown in recent decades.
Just think: 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.
Transformational reforms to improve the business environment will be essential: cutting red tape, increasing competition, and encouraging entrepreneurship.
All of this can help countries create jobs and harness the benefits of promising technologies such as AI. Why is this so important? Because only when we achieve higher productivity growth can we meet the aspirations of people everywhere for better lives for themselves and their children.
So it is clear: we need to double down on policies that we know can lift productivity.
But we also need to redouble our search for promising new ideas.
And this is what we intend to do during this conference. Together, we can look for new ways to jumpstart growth in emerging markets.
At the IMF, we recognize our responsibility in this regard. We are putting together our own IMF Advisory Council on growth and entrepreneurship. I want to thank Minister Sturzenegger of Argentina for agreeing to serve on it. We count on deep engagement with this new Council to find ways in which economies can be stronger for their people.
But we also know that there is huge value in countries working together.
As you said recently, 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.”
I couldn’t agree more! And we are seeing a new force for cooperation—sometimes based on areas of common interest, sometimes based on geography—that are crucially important. So we have to be determined and we have to be engaged, but most importantly, we must remain positive.
Together we can do well for our member countries and for their people.
Shukran!