Business & Money | Sunday 23 February, 2020 2:06 am |

The Conference of the Institute of International Finance on the G20 Summit kicked off here on the sidelines of the first meeting of the finance ministers and central bankers of the group member states, under the presidency of the Kingdom of Saudi Arabia.
Governor of the Saudi Arabian Monetary Authority Dr. Ahmed bin Abdulkarim Al-Khulaifi stated during his speech at the conference that the global economy has witnessed many challenges recently due to the uncertainty in world trade, geopolitical factors and social unrest in some parts of the world, including this region, in addition to structural challenges persist in many countries.
It was not expected to see a slowdown in global growth in 2019, as global GDP growth recorded its lowest result since the global financial crisis, he elaborated, adding that “This backdrop was definitely a challenging one for policymakers. But the Phase One trade agreement between the US and China and a more orderly Brexit process helped in stabilizing business confidence."
Advanced, central banks were able to facilitate their policy in 2019, and the ensuing increase in the prices of financial assets led to further adjustment in financial conditions, as well as the renewal of capital flows towards emerging markets, which in turn led to more financial conditions support in many of these countries, he stated.
"Central banks no longer have many options as was the case a decade ago, as questions arise about the continued effectiveness of expansionary monetary policy, that if we take into account levels of very low interest rates, or in other words, the major central banks have nothing but limited space to tackle the most serious economic competitions, and it is still unknown whether high financial asset prices pose a threat to financial stability, the debate continues over whether negative side effects of negative interest rates of the policy, are beginning to emerge more strongly.
Dr. Al-Khulaifi pointed out that the Kingdom of Saudi Arabia as an open economy, like other countries in the region, is subject to the effects of global developments, and that the growth of the gross domestic product in the Kingdom is expected to rise in 2020, consequently such a positive development will be mostly due to the further strengthening of growth in our non-oil sector.
He explained that the monetary, financial and structural policies in the Kingdom are all directed towards expanding the gross domestic product of the non-oil sector, in the medium term, and that our main policy objective is in fact to encourage economic diversification under stable financial and monetary conditions, and this is a positive message not only for Saudi citizens, but also for the whole region.
The governor said: "In our next meeting of the G20, we will look for good news from other countries as well, which we hope, in general, to confirm the baseline expectations that the slowdown in growth has reached the lowest level and that a shift in production growth can be expected in the year, even if it is moderate, he said, adding that we must not ignore that we still face a number of negative risks, as we cannot completely ignore the possibility of escalating trade tensions and still achieving WTO reform requires some work and time, and geopolitical risks still exist with us, and the risk of the spread of epidemics, due the outbreak of the Coronavirus in China, is looming.
It is still too early to get a complete picture of the economic damage caused by this event to global growth this year, he explained.
Al-Khulaifi stressed that the Kingdom intends, during its presidency of the G20, to focus more on how to strengthen monitoring of global risks, and how to achieve the best political cooperation to address those risks through the G20, indicating that there should be a better understanding of the risk map and a more effective policy response to deal with potential future shocks, as that should be useful in creating the conditions for strong, sustainable, balanced and inclusive growth, which is the primary goal of the G20.
"In order to draw a broader picture for the aspirations of the Kingdom’s presidency for 2020, it is better to refer to the general theme of the presidency of the G20
to seize the opportunities of the twenty-first century for all, as the three main objectives fall under this topic are: (Firstly, empowering peoples through creating conditions in which women and youth can live, work and prosper, secondly, protecting the Earth by enhancing collective efforts to protect common global interests and thirdly opening new fields by benefiting from innovations and technical progress, he indicated.
Al-Khulaifi explained that for an effective division of labor, the first and third goals will be the financial path, while climate change issues will be addressed by the Sherpa Track, as the global risk report issued by the World Economic Forum last month, indicated that environmental concerns top the risks, in the long term, and the financial sector also pays increasing attention to such concerns.