Emerging markets preempted global rate hikes: Colombia’s ex-Finance Minister

Mauricio Cardenas, Colombia’s former Minister of Finance

Mauricio Cardenas, Colombia’s former Minister of Finance, said the rising interest rates in advanced economies pose challenges for emerging markets — which were well prepared to mitigate such drawbacks.

In an interview with Argaam on the sidelines of AlUla Conference for Emerging Market Economies, Cardenas added that several emerging economies preceded advanced economies in terms of interest rate hikes, which partially offset the impact of the recent global monetary tightening on them.

Some emerging economies such as Indonesia, India and Mexico have already begun to cut interest rates this year. “This is despite the US Federal Reserve holding steady to its current policy range, thanks to improved local economic conditions that have stimulated further growth,” said the former minister.

He pointed out that the biggest challenge now is the uncertainty surrounding the new US economic policies, which may affect capital flows, the US dollar value and global trade.

Cardenas also stressed that many emerging market central banks are adopting a wait-and-see mode amid regime change, awaiting an evolving situation in the US economy.

On another note, Cardenas hailed AlUla Conference for Emerging Market Economies, stressing the importance of participating countries to join hands as one bloc in an era of increasing uncertainty, especially in terms of trade — being a key driver of development.