https://arab.news/8pb9e
RIYADH: The global economy presents promising growth opportunities, but emerging challenges could disrupt predictability, complicating the landscape for investors and policymakers, according to the Saudi Central Bank governor.
Addressing the opening session of the 48th Council of Governors of Arab Central Banks and Monetary Authorities in Cairo, Ayman Al-Sayari emphasized the need for collaborative efforts to navigate ongoing economic turbulence.
He acknowledged the crucial role central banks play in managing monetary policies amid shifting global dynamics, particularly regarding inflation, debt management, and evolving financial technologies.
“The recent interest rate cuts by several central banks signal the start of a monetary easing cycle. This is expected to gradually reduce borrowing costs and public debt risks, while also stimulating investment and enhancing economic activity,” he said in his address.
He noted that recent years have seen the Saudi economy experience accelerating growth, driven by significant transformation and economic diversification efforts.
“In this context, Saudi Arabia continues to uphold a balanced and robust economy that can absorb external shocks, even as many economies worldwide are affected by external factors and geopolitical tensions,” added Al-Sayari.
These issues were further emphasized by Fahad Al-Turki, director general and chairman of the board of directors of the Arab Monetary Fund, who noted that the region’s unemployment rate was alarmingly high at 10.9 percent by the end of last year — double the global average, according to World Bank figures.
He underscored the importance of adopting policies that would address this issue and meet the economic aspirations of the region’s populations.
He also pointed out that rising debt levels remain a significant concern for Arab economies in light of current global conditions, emphasizing the need for effective debt management to ensure sustainable financial health.
Despite these challenges, Al-Turki expressed optimism for the future, citing AMF projections that predict an improvement in the region's economic growth rate.
The Arab economies are expected to grow by 2.8 percent this year, with a forecasted rise to 4.5 percent in 2024, compared to a modest 0.3 percent growth last year.
Inflation, which remains a concern, is also expected to decrease over the next two years. The AMF anticipates inflation across Arab countries to drop from 13.2 percent last year to around 11 percent in 2023, and further to 7.8 percent in 2024.
However, these projections exclude certain Arab nations experiencing extraordinary inflation due to internal challenges.
Al-Turki noted that financial safety indicators in the Arab region show an average capital adequacy ratio of 17.4 percent by the end of last year — well above the Basel III requirements.
Additionally, liquid assets made up 34 percent of total assets in the sector, while loan provisions covered over 90 percent of non-performing loans in Arab banks.
On the technology front, he pointed out that opportunities presented by artificial intelligence offer significant potential for Arab countries but stressed the need for robust regulations and risk management frameworks to fully harness its benefits.
He called for enhanced economic resilience across Arab nations to better withstand potential global shocks.