"The global economy will fluctuate," he said in an interview with Arab News. "It's what markets do. Events, technology, innovation, demographics and more will influence those fluctuations in ways nobody can predict. We need, all of us, to accept that life and economies are uncertain and devise stable ways of dealing with that uncertainty. Hoping that a unified global economic direction will become apparent over a time period of less than a decade is unrealistic."
He said Euromoney, which is hosting a conference in Riyadh May 17-18, will explore and explain the new financial landscape and the place Saudi Arabia is taking on the global stage and what role it can play in world economic development.
Saudi Arabia must look to itself. It must determine the way it wants to be in the light of political, economic, technological and cultural developments globally. Once it has a clear path it can then consider how best to play a role globally, he added. There are many indications that the Kingdom is doing this — through membership of the G20, the International Monetary Fund and other multilateral financial institutions as well as being a major investor in securities and other financial assets — and, of course, through OPEC.
"Saudi Arabia must act in its own interest and focus on areas where its national interest coincides with a wider global responsibility. Then it will be a major force for global development," he added.
Asked about Saudi Arabia's recently announced huge spending package, Banks said: "It's too early to tell. I hope that the spending package will be catalytic to the development of the private sector. Employment and empowerment of Saudi people will come from a diversified private sector-driven economy — not from state patronage. Saudi policy-makers are more than aware of this and are doing what they can to move the country to a different economic model. But it takes time — generations — to do this. The needs of the people must be met during that period of transition, so the government had little choice but to do what it did."
As the focus has shifted to small and medium-sized enterprises (SMEs) in the Kingdom, Banks said, they "can and will" play a big role. But, again, the process takes time. The necessary conditions for successful SME development include cultural factors as well as streamlined legislation, finance and training. Counter-intuitively the key factor to successful SME development is the ability to fail and the acceptability of failure — more the failures, more (are the chances of) successes.
Asked about the response to this year's conference, Banks said, Euromoney, which has been hosting the conference in Saudi Arabia since 2006, has held conferences during periods of boom and periods of bust. The mood of the markets changes, but the core of the conference remains the same. The response from the conference participants is generally positive, but with a careful appreciation of the unique situation in the KSA. There are many things the market calls for which the policymakers are understandably cautious about, for example, the introduction of government debt markets; relaxation on certain capital market regulations and more rapid financial liberalization. The direction is clear — it is the speed of travel, which is debated.
"Despite unrest in some of the countries in the region, we have seen no lack of interest from international participants for this year's conference. The speaker lineup is strong and the media coverage good. Saudi Arabia is not immune from the regional unrest, but the story here is different from Egypt, Tunisia, Libya and Syria. And in our markets people understand that," Banks concluded.
