SAMA Governor: International trade restrictions threaten global economy in medium term

Ayman Al-Sayari, Governor of the Saudi Central Bank (SAMA)

Ayman Al-Sayari, Governor of the Saudi Central Bank (SAMA), said the key risks facing the global economy in the medium term include rising geopolitical conflicts, growing concerns about economic fragmentation among world economies, and the implications of increasing restrictions on international trade.

During the third G20 Finance Ministers and Central Bank Governors (FMCBG) meeting under the Brazilian presidency, during the "Global Economic Outlook and Ongoing Challenges," session, Al-Sayari explained that the global economy turned out to be resilient thanks to well-calibrated monetary policy formulation to tackle inflation.

If the nominal growth rate remains higher than the interest rate, then the risks to growth will likely remain contained in the near term.

Al-Sayari also went on to say that rising income inequality is a continually recurring subject of discussion. The challenge is to adopt fiscal and social policies such as targeted social benefits and well-designated labor market policies.

It was further mentioned that establishing the link between biodiversity and financial stability is a step in the right direction but requires more research and analytical work to understand the impact of nature-related risks on financial stability.

As for non-bank financial institutions, they have emerged as key players in the financial sector, and global financial stability could hinge on their resilience, he added. Emphasis was placed on the importance of working towards unifying and coordinating global efforts to regulate crypto asset activities to avoid exploiting gaps in different countries' systems and policies.