encouraging the expansion of trade and economic growth and discouraging policies that would harm prosperity. In recent days, the IMFC members welcomed steps to further strengthen the effectiveness of the IMF's three core functions: its surveillance of global economic trends, its lending, where we welcome the review program design conditionality, and its capacity development assistance, which helps ensure growth in so many member countries and within countries.
Addressing global debt vulnerabilities remains a priority for our members, especially for low-income and vulnerable countries. They welcome the progress made in debt treatments under the G20 Common Framework. They also exhibit their commitment to addressing global debt vulnerabilities in an effective, comprehensive and systematic manner. And members encouraged the IMF and the World Bank to help advance the implementation of the three-pillar approach to address debt service pressures. We appreciate the tremendous efforts of the members in shaping the medium-term direction of the IMF and contributing to the DA declaration.
The DA declaration presents a forward-looking approach to strengthening the IMFC process and advancing governance reforms and has received the full support from the members. Just to clarify, when I say declaration, this is the declaration that was prepared by the deputies in their meetings in Saudi Arabia earlier this month in preparation for this meeting. Here we aim to ensure that the Fund remains well equipped to meet future challenges in line with its core mandate.
And before I hand over to Cristina, I have to comment on the topic of the day, which I think a lot of people are talking about: trade tension. Many, many members have told me how the trade situation has created significant uncertainty. Indeed, the buzzword was uncertainty all over this week, and indeed it also carries with it market volatility, presenting real risks to global growth and financial stability. But as Cristina said recently, these trade conflicts have been like a pot boiling on a stove.
Well, now that pot is boiling over. In other words, we should not be surprised that there are trade tensions, and this situation is an opportunity for us all to have constructive conversations about how we will move forward together. This is a challenging time, but I have always been an optimist and absolutely make no apologies for that. And I will explain why.
History tells us that the bigger the challenge, the more it requires us to come together, to convene, and to have an honest conversation. That's exactly what happened this week. And that's exactly the power of the IMF to actually be able to convene everybody around the same table in closed rooms and discuss issues in a constructive way.
And I have told colleagues, I arrived in Washington a week ago with a lot of noise in my ears from reading the news and following social media. And I told everyone that I met in the early days, please keep your thoughts cool and we will see where we are going to end. And actually today we are ending in a lot better position than when we started the week. People understand the consequences and are working together in a constructive manner to resolve tensions.
I'm also confident that because of the IMF, the IMF is really watching us very closely, following the global situation and is already providing advice to its members in real time, offering an assessment of the potential impacts and the best way to proceed. This week has seen an incredible assurance confirming the position of the IMF and its convening power in contributing to positive development, including in relation to Syria.
Gathering together to talk about Syria and building on our meetings in AlUla has given us a new sense of urgency and purpose to turn a conflict-affected state, which is Syria, into a stable and economically successful one, benefiting the region and the world. It is not just about the money. It's about the work that the IMF and other partners can deliver on capacity development, quality data, and timely advice.
Again, I would like to thank Cristina and the IMF staff, and I can tell you it was an incredible unanimous position today to thank the IMF for their incredible, incredible brain power, which was able really to produce a very comprehensive report about what's happening in the world in a very short period of time, and it was fantastic. So, thank you, Cristina. Thanks to all the IMF staff, and thank you again for being here. The floor is yours.
Thank you very much, Managing Director, for your kind words now, but above all for your exemplary leadership of the IMF. I want to tell everybody here that the way you chaired the meetings brought the members together to speak openly, frankly, and as a result to find a path to common understanding that is so necessary in the current environment.
Because as we all know, our meetings take place against a challenging backdrop. You have seen our World Economic Outlook. It shows that the global economy is facing a significant slowdown and also that risks are on the downside. Understandably, ministers and governors are concerned, but at the same time, they have also exhibited a remarkably constructive spirit in these meetings, coming together, showing willingness to take on the challenges facing the global economy.
Managing Director Georgieva laid out the substance and achievements of our discussions. Let me add just three points. First, ministers and governors agreed on the importance of reducing uncertainty and working together to clarify policies.
Second, very important, they recognized that they need to seize the moment to put their own houses in order. And I saw very firm resolve to tackle difficult and in many cases delayed reforms at home to strengthen resilience, to remove impediments to productivity, and lift up their medium and long-term growth prospects, and to address underlying domestic imbalances which drive external imbalances.
To put it simply, addressing external imbalances starts at home. And finally, we discussed how the IMF can help countries successfully navigate this period of change and build resilience. And I was very heartened to hear from the membership strong support for our work to promote macroeconomic and financial stability and to do it through robust bilateral, multilateral and regional surveillance.
Be there for our members when they need to cope with balance of payment problems, finance them, but also finance them with the clear objective that they can strengthen their economies. And I can say the words of support for our capacity development, in other words, helping countries have strong institutions, strong policies, that support was overwhelming.
At this period of complex challenges for the membership, they also gave us homework, and I want to emphasize two areas where we will further deepen our work. One, do more work on external imbalances. Dig deeper when they could become a source of concern and provide advice on how to address them through policies.
Two, continue to scan the financial sector to identify potential sources of instability, especially in the non-bank sector, and provide advice on how best to enhance resilience. Overall, what I can tell you is that what I heard this week was an incredible determination by our members to steer the economies through this period of change and uncertainty, and it gave me confidence that we actually can take challenge and make opportunity, that we can have a more resilient and more balanced world economy.
Like Managing Director Georgieva, I started the week more anxious of our capacity as a global community to come together, and I finished the week with more confidence that this is exactly what we will do. Absolutely.
Thank you very much. Minister, Managing Director, we'll now open the floor to your questions. So, please raise your hand if you have a question, and please identify yourself and your outlet. I'll start here in the middle. I'm going to go to the gentleman in the kind of white shirt. Yes, right here.
Thank you, Julie. Awad Luka from AFP. The question is both for Minister Al Jadaan and Managing Director Georgieva. You both pointed out that we ended the week in a way better position than we started it. Managing Director, during your curtain-raiser speech, you also raised the hope that this week might be an opportunity for everybody to discuss. Could you elaborate perhaps on how this week helped dial down the uncertainty you talked about and the global tensions when it comes to trade? Thank you very much.
Finding a path to solutions starts from looking at the problem from the same viewpoint. I'm sorry, let me start this again. To resolve a problem, you have different parties. To resolve a problem, they need to have information about the problem that allows them to have a meaningful conversation. And I can say that I'm very, very grateful to the staff of the IMF because what we did was to offer the members information that allows them to see what is ahead of them and expand their horizon.
If you look at a problem only from a narrow point of view, it is difficult to have a meaningful conversation to resolve it. Secondly, what I saw was a genuine openness to present views in a candid way and to listen to each other. And third, and the third is most important, it is a traction in engagement among members that could then bring a faster and better outcome.
I don't want to sugarcoat, we still have quite a challenging time. It is challenging not just because of the tariffs and the uncertainty. It is also challenging that there are other transformational forces in play. Because of the overwhelming attention to tariffs, we stopped talking about other things like artificial intelligence, demographic transition. And I think that sense that we can have an engagement in a comprehensive way on a complex set of challenges came during the meetings quite strongly.
Does it mean that everybody agrees with everybody else? No. But do we have an open conversation, engaged conversation with a fair space for everybody to present their views? Yes.
Thank you. And if I may, Julie, I think just to complement the Managing Director, I think overall, what do you need to resolve conflicts like this or tensions like this? You need to make sure that you understand the parties' positions, where are they coming from, why they are taking these positions, and what are they seeking to achieve. And second, make sure that they actually talk. Yes. And that is largely what happened this week.
So to have everybody who is party to all this trade tension, which is almost everybody, all the members, around the same table in a candid discussion that is closed, even some of it has been in the restricted sessions, to really be open and talk about what are they doing, why they are doing it, what is their view of what is going to happen in the next even short period of time, is very assuring. Sharing that information is very assuring.
Understanding the implications of these actions on other nations, including low-income countries, emerging economies, and the implications of that is actually very helpful for them to appreciate the consequences of their positions. And I can tell you, I cannot disclose some of the discussion that has taken place, but I can tell you there was a very clear, frank discussion including a projection of a timeline for a resolution of some of these issues. So that is very assuring.
Can I just add one point? That when people are in the same room, the abstract policies become more human because then we understand these policies are affecting people, and the people of the whole world are then present, and that makes the conversation different. No more is it an academic conversation. It is a very real-life conversation.
Thank you. I'm going to go to this side. I'll go to the, let's say, second row gentleman with the blue jacket and the glasses.
All right. Thank you so much for taking my question. I'm from Bangkok. Your Excellency, you have mentioned the uncertainty around the world in your opening remarks. So I want to ask specifically on the consequences for emerging markets as a whole, and what is your policy advice for the situation? And also, do you see any short-term lasting impacts to this country? Thank you.
I'll give it a try and then you could complement. First of all, I look forward to our annual meetings in Thailand next year. And seeing the preparation from now, I think a lot of people are excited and waiting for our meetings there. I'm sure it would be very constructive in the hospitable country of Thailand and the Kingdom of Thailand.
Obviously, emerging economies, particularly emerging economies with limited fiscal space, have little room to maneuver to deal with shocks. And even if these shocks have been resolved, there are some lasting impacts. So the earlier, the faster that these shocks or trade tensions in this context is resolved, the better for everybody. But we are not in a perfect world and things may take time and countries may get an impact. And that's where the IMF excels. I mean, that's where the IMF capacity building advice comes to actual real play. So the Managing Director is here and her staff, with incredible talent, would be able actually to provide that support to emerging economies.
As a group, emerging markets by and large are generally highly open. Many of them rely on exports as an engine for growth. They are quite active in international bond markets. So because they are highly exposed, the impact on emerging markets is quite significant.
Some of the emerging markets, especially those that were in a tougher position after the multiple shocks, also face very limited and some of them non-existing policy space to act. We have downgraded growth projections for emerging markets and developing economies to 3.7% for 2025. This is a 0.6% downgrade, and to 3.9% for 2026. What does that mean? It means that some of them would see a significant slowdown in their convergence to higher-income countries, and they are also seeking ways to overcome the challenges ahead.
What works for them is that emerging markets have been fantastic in building resilience to shocks. And when I look at the universe of emerging market economies, quite a number of countries have become more agile in their policymaking, more mature in how they approach their fiscal and monetary policy. That puts them in a better position. To use an analogy, it's like they have gone through multiple periods of being tested and they got immune to shocks to a certain degree.
They would be seeing possibly somewhat less inflationary pressure. Why? Because when you are on the receiving end of tariffs, what it means is that actually domestically you don't have pressure on prices.
We can expect emerging markets to look at their policy tools very carefully. We urge them to be very careful with fiscal measures. Don't rush to provide fiscal support willy-nilly because you cannot afford to lose fiscal space. Have a medium- to long-term framework to rebuild this fiscal space. On the monetary policy side, watch pressure. We are saying inflation is likely to slow down, but watch it and watch inflation expectations.
Do what is necessary given the data you have, and very important, allow the exchange rate to be a shock absorber. We have the integrated policy framework that offers advice to countries how to approach exchange rate issues with great care.
You're an emerging market. Actually, the minister is not saying that. But one thing emerging markets can do for themselves is get your own house in order. Pursue reforms relentlessly because this is what makes you stronger.
