AlUla Conference: Cooperation Among Emerging Markets to Address Global Uncertainty

Global economic uncertainty took center stage at the AlUla Conference for Emerging Market Economies, which brought together finance ministers, central bank governors, and policymakers from emerging markets to explore solutions for shared challenges.

The goal, as Saudi Finance Minister Mohammed Al-Jadaan stressed in his opening speech, was to build a stronger, more sustainable, and inclusive global economy.

Jointly organized by the Saudi Ministry of Finance and the International Monetary Fund (IMF), the conference served as a platform for discussing local, regional, and global economic developments, as well as policies and reforms that could shield emerging economies from current and future economic shocks. Among the key issues on the agenda were sluggish growth, increasing financing needs, and rising public debt levels. Al-Jadaan also stressed the need for a global framework for restructuring sovereign debt.

IMF Managing Director Kristalina Georgieva highlighted the importance of adaptability and resilience for emerging markets, stating that these factors would be key to future success.

Syria’s Role in the Discussions

The Syrian economic situation was also a topic of discussion. Georgieva announced that the IMF has initiated communication channels with the Syrian government, telling Asharq News that IMF staff have already begun engaging with Syrian officials to bridge the data gap that has widened over the years. She emphasized the need for key institutions, such as the central bank, to receive support in rebuilding Syria’s institutional capacity to serve its economy and people efficiently.

She added that the IMF is ready to assist Syria within the constraints of the current circumstances. According to Asharq Al-Awsat, an IMF delegation is expected to visit Damascus soon to explore potential cooperation mechanisms.

Regarding Lebanon, the IMF is awaiting the government of Prime Minister Nawaf Salam to secure parliamentary confidence based on its ministerial statement before proceeding with further actions.

The speech by the Governor of the People’s Bank of China, Pan Gongsheng, attracted significant attention, especially in light of the ongoing US-China trade dispute, which has seen Washington impose tariffs on Beijing and China respond with countermeasures.

Pan reassured attendees that despite current economic slowdowns, China’s economy remains fundamentally strong. However, like other emerging markets, China faces risks from the rise of trade protectionism, geopolitical tensions, and global economic fragmentation.

The conference comes less than a year after the IMF established its regional office in Riyadh, aimed at supporting economic development in the region by providing technical assistance and promoting sustainable growth.

Sovereign Debt Crisis and Global Cooperation

Al-Jadaan stressed the importance of a long-term vision to improve economic conditions in emerging markets and find solutions for sovereign debt challenges. In his speech, he reiterated the need for multilateral cooperation, stating that conferences like this one are crucial starting points for tackling global economic challenges.

He highlighted key topics discussed at the conference, including structural transformations, high debt levels, limited fiscal space, technological shifts, monetary policy, trade and investment, and building resilience against future economic shocks.

The Saudi minister underlined the importance of strengthening East-West and North-South cooperation, arguing that governments and the private sector must work together to prepare economies and workforces for the future. He also called for innovative solutions to tackle structural risks such as debt burdens that threaten development gains, noting that reforming global initiatives—like the Common Framework for Debt Restructuring—is essential.

Georgieva, for his part, pointed out that high debt levels, limited financial resources, and growing fiscal pressures pose significant challenges to emerging economies. She cautioned against short-term fiscal stimulus measures, warning that while they may boost domestic demand in the short term, they could also fuel inflation and financial instability.

During her speech at the AlUla Conference, Georgieva predicted that inflation in advanced economies will return to target levels faster than in emerging markets, partly due to the strength of the US dollar, which could trigger capital outflows and further complicate monetary policy in developing economies.

She called for a fundamental shift in economic policies and trade strategies, with a stronger emphasis on international cooperation to tackle emerging challenges, particularly given the rapid changes in technology, geopolitics, and the global economic landscape.

High Debt and Limited Fiscal Space

The conference featured a panel discussion titled “High Debt and Limited Fiscal Space,” which included Al-Jadaan, Russian Finance Minister Anton Siluanov, Zambian Finance Minister Situmbeko Musokotwane, and former Colombian Finance Minister Mauricio Cardenas.

Al-Jadaan highlighted the global challenge of mobilizing resources to support development, reaffirming Saudi Arabia’s commitment to developmental aid despite its significant domestic investment in Vision 2030 projects. He noted that a large portion of Saudi aid is linked to IMF programs, ensuring sustainable and impactful economic reforms in recipient countries.

Siluanov expressed Russia’s willingness to restructure foreign debt, emphasizing the importance of prudent fiscal policies in managing the global debt crisis. He noted that over the past 25 years, Russia has restructured the debts of 22 countries, totaling approximately $30 billion, with an equivalent amount restructured through bilateral agreements.

Economic experts have warned that a protracted conflict between Israel and Iran could have far-reaching repercussions on the global economy, driving up energy prices and disrupting key sectors including aviation, insurance, trade, and maritime navigation.

Speaking to Asharq Al-Awsat, Saudi Shura Council member Fadl Al-Buainain said the ongoing military confrontation is already impacting global energy markets, with oil prices spiking to multi-month highs in the immediate aftermath of the outbreak.

He warned that continued Iranian threats to close the strategic Strait of Hormuz could further fuel the surge in energy prices. “Such an act would be hostile, not only to Gulf nations but also to global consumers, compounding the challenges already facing the world economy”, Al-Buainain said.

He stressed that the energy sector is particularly vulnerable to military escalations. “Any disruption to oil production or exports from major producers could send oil and gas prices skyrocketing, with direct consequences for global economic stability”, he said.

While current military actions have had limited impact on output and exports, Al-Buainain cautioned that any direct strikes on energy infrastructure could push oil prices above $100 per barrel, depending on how badly global supply chains are hit.

The conflict has already disrupted international flight routes and increased operational costs for airlines, he said, while surging risk premiums have driven up insurance costs across the region. Maritime trade and shipping lanes are also at risk of direct disruption.

Al-Buainain noted that the fallout will vary across the region. He pointed out that Saudi Arabia, thanks to its strategic location and Red Sea ports, is better positioned to maintain the flow of trade. The kingdom also benefits from pipelines that transport oil from the east to the west, partially shielding its exports from Gulf disruptions.

He described energy as the “real engine” of the global economy and said it, along with foreign trade, will bear the brunt of the economic impact. "But the human cost and developmental setbacks caused by war are far worse”, he added.

Al-Buainain warned that prospects for a swift diplomatic resolution are diminishing. “Starting wars is easier than ending them,” he said, adding that an Iranian move to shut down Hormuz, while difficult in practice, could spark a direct confrontation with global powers, particularly the United States. “If American interests are attacked, Washington could be drawn into the conflict, which risks expanding beyond control”.

Khaled Ramadan, head of the Cairo-based International Center for Strategic Studies, said Israel’s strikes on Iranian energy infrastructure, including the Abadan refinery, which has a capacity of 700,000 barrels per day, could severely reduce oil and gas supplies if the conflict drags on.

He told Asharq Al-Awsat that Brent crude had already risen 8–13% following the escalation, crossing $78 per barrel. “Should the Strait of Hormuz be closed, we could see oil prices surge to record levels”, he warned.

Ramadan said the conflict could also disrupt global supply chains, especially through Hormuz, affecting non-oil goods such as electronics and food. Shipping and insurance costs would rise, leading to higher consumer prices and a slowdown in global trade.

Food staples such as wheat and corn, along with petrochemicals, garments, electronics, auto parts, and pharmaceuticals are all likely to see price increases, he said, citing higher energy and transport costs as well as declining market confidence.

Ramadan added that the economic fallout includes rising inflation, weakening currencies, and a drop in investment — particularly in tourism and tech.

“The Iranian rial and Israeli shekel have already hit their lowest levels this year,” he noted, adding that the war could reshape global energy alliances, with Europe increasingly seeking alternative suppliers.

AlUla Conference: Cooperation Among Emerging Markets to Address Global Uncertainty