The International Monetary Fund (IMF) and Saudi Arabia have announced a groundbreaking initiative to jointly host an annual high-level conference aimed at addressing pressing global economic challenges. The inaugural event, titled the AlUla Conference for Emerging Market Economies, will take place in the historic city of AlUla, Saudi Arabia, from February 16 to 17, 2025. This platform will serve as a critical forum for dialogue among policymakers, private sector leaders, and academics to devise strategies for fostering economic resilience and inclusive prosperity.

A Timely Initiative Amid Global Challenges

In a joint statement, IMF Managing Director Kristalina Georgieva and Saudi Arabia’s Minister of Finance Mohammed Al-Jadaan emphasized the growing frequency and intensity of global shocks. These include conflicts, geoeconomic fragmentation, pandemics, climate change, food insecurity, and the widening digital divide. They warned that these challenges, if not adequately addressed, risk undermining the hard-earned progress of emerging markets in raising living standards and achieving macroeconomic stability.

“Emerging market economies face disproportionate risks from global disruptions, which can erode gains in poverty reduction, economic growth, and financial stability. It is essential to promote international cooperation and targeted policies to build resilience and spur inclusive prosperity,” the statement noted.

Conference Focus Areas

The AlUla conference is set to cover a wide array of topics, including:

1. Economic Resilience: Exploring strategies for emerging markets to withstand external shocks and recover sustainably.
2. Inflation and Supply Chain Disruptions: Addressing inflationary pressures caused by post-pandemic demand surges and supply chain delays.
3. Geopolitical Conflicts: Examining the economic implications of ongoing conflicts, including the war in Gaza and tensions around the Red Sea shipping lanes.
4. Climate Change: Discussing the economic impact of climate risks on emerging markets and pathways to sustainable development.
5. Digital Transformation: Bridging the digital divide to ensure equitable access to opportunities in the digital economy.

Saudi Arabia’s Expanding Role in Global Economic Dialogue

The announcement underscores Saudi Arabia’s growing influence in international economic affairs. The Kingdom, which hosts the IMF’s first regional office in the Middle East and North Africa (MENA), has strengthened its partnership with the IMF in recent years. This office, inaugurated in Riyadh in April 2024, aims to enhance capacity building, promote regional integration, and provide a platform for economic surveillance and policy coordination.

The collaboration aligns with Saudi Arabia’s Vision 2030, which seeks to diversify the economy, reduce dependence on oil, and position the Kingdom as a global hub for investment and innovation. The IMF has praised Saudi Arabia for its financial contributions to capacity development initiatives, particularly in fragile states.

The Economic Context of Emerging Markets

Emerging market economies are grappling with a confluence of crises that threaten their stability.

1. Inflationary Pressures: Global inflation remains elevated due to supply chain bottlenecks, increased energy prices, and persistent demand for goods. For emerging markets, these pressures are exacerbated by currency depreciation and higher import costs.
2. Food and Energy Insecurity: The war in Ukraine disrupted grain and energy exports, while conflicts like the Israel-Hamas war further strained global supply chains. These issues disproportionately impact low-income countries, heightening vulnerability to social and economic instability.
3. Climate Risks: Climate-related disasters, from floods to droughts, are increasingly disrupting agricultural productivity and infrastructure in developing regions, adding urgency to discussions on resilience and adaptation strategies.

Key Participants and Expected Outcomes

The AlUla conference will gather finance ministers, central bank governors, and senior policymakers from both emerging and advanced economies. Participants will include representatives from multilateral organizations such as the World Bank, the African Development Bank, and the United Nations, alongside private sector leaders and scholars.

The conference aims to foster actionable policy recommendations, promote public-private partnerships, and strengthen global cooperation in tackling shared challenges. Key deliverables could include frameworks for climate financing, strategies for digital inclusion, and measures to address systemic risks in the global financial system.

Geopolitical and Regional Implications

The timing of the AlUla conference coincides with rising tensions in the Red Sea region, where shipping routes critical to global trade have been targeted by Houthi militants amid escalating conflicts. This highlights the need for coordinated international efforts to safeguard maritime security and ensure the uninterrupted flow of goods.

The conference also reflects Saudi Arabia’s commitment to advancing multilateralism in the face of rising protectionism and geopolitical fragmentation. As a leading member of the G20, Saudi Arabia is well-positioned to champion the interests of emerging markets and bridge divides between developed and developing economies.

Strengthening Regional and Global Cooperation

The AlUla initiative complements existing efforts by Saudi Arabia and the IMF to address global challenges. In 2024, the two entities co-hosted a Joint Regional Conference on Industrial Policy for Diversification, which explored pathways for sustainable economic growth in the MENA region.

Through initiatives like these, the IMF and Saudi Arabia aim to build a foundation for long-term resilience and prosperity, particularly in regions most vulnerable to global shocks.

Looking Ahead

The inaugural AlUla Conference for Emerging Market Economies represents a significant step toward addressing the complex and interconnected challenges facing the global economy. By fostering dialogue among key stakeholders, the event seeks to identify innovative solutions that not only mitigate risks but also create opportunities for sustainable and inclusive growth.

As the world braces for continued uncertainty, the collaboration between the IMF and Saudi Arabia serves as a beacon of hope for emerging markets striving to navigate an increasingly volatile landscape. This initiative underscores the importance of solidarity and international cooperation in building a more equitable and resilient global economy.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

15th November, 2024