The global economy is facing a combination of serious risks, including persistently high energy prices, mounting government debt and growing uncertainty surrounding the massive investment in artificial intelligence, International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned.
Speaking ahead of the IMF and World Bank Annual Meetings in Bangkok, Georgieva said the global economy was being pulled in opposite directions by the ongoing energy shock linked to conflicts in the Middle East and a surge in demand driven by artificial intelligence.
“The combined impact of these two forces is highly uneven across the world,” Georgieva said, noting that many countries are being left behind by the AI boom.
She said the IMF’s latest economic forecasts, due to be released during the meetings, would show that economies affected by war are likely to record some of the biggest downward revisions to their growth outlook.
Ukraine, which has suffered extensive damage to civilian and economic infrastructure, is among those expected to be affected. Gulf economies have also been hit by Iranian attacks and disruptions to energy exports.
The IMF had previously projected global growth at 3.0 percent for 2026, with growth expected to improve to 3.4 percent in 2027. Georgieva did not indicate whether the new forecast would change the overall 2026 projection.
Energy Prices Keep Pressure on Economies
Georgieva said energy prices remain a major concern, with oil prices around $100 per barrel and disruptions to refining capacity adding significant costs to fuel products such as diesel.
She warned that demand for energy could rise during the winter heating season, while natural gas supplies remain vulnerable because of restrictions and security threats affecting liquefied natural gas shipments through the Strait of Hormuz.
“Even if the war in the Gulf were to end soon, the problem of high energy prices will likely persist for some time,” she said.
Higher energy costs are also feeding inflation and putting pressure on interest rates and government bond yields. According to Georgieva, yields on 10-year government bonds in the United States, Germany and Japan have reached their highest levels in years.
Growing Debt Adds to Global Concerns
The IMF chief also raised concerns over the growing burden of public debt, which she said is weakening economic growth while adding to inflationary pressures.
The IMF estimates that global public debt is at its highest level since World War Two and could rise above 100 percent of global GDP before 2030.
Georgieva singled out advanced economies, particularly the United States, as facing significant debt challenges.
She said governments can no longer depend solely on stronger economic growth to resolve their fiscal problems and called for credible medium-term plans to reduce debt.
“We don’t see decisive action in the high-debt advanced economies where the need of the hour is for credible medium-term fiscal consolidation plans,” she said.
Georgieva also urged central banks to remain focused on controlling inflation and suggested that a cautious approach to interest rates could be appropriate in many countries.
She warned central banks against coming under pressure from governments to ease fiscal problems by buying more government debt.
“I would call this monetary cowboys, running to the rescue of the fiscal agents, and my message is: please don’t,” she said.
AI Boom Brings Opportunities and Risks
While artificial intelligence could boost global economic growth, Georgieva warned that the scale of investment in the sector could also create financial risks.
She said AI investment as a share of GDP could eventually exceed investment previously seen in major infrastructure developments such as railways, electricity grids and telecommunications.
The concentration of investment and financial value in a relatively small number of AI companies is also creating pressure for those firms to deliver strong productivity and earnings gains.
If expectations fail to materialise, Georgieva warned, a market correction could develop into a much broader economic shock.
However, she said IMF research suggests that AI could add about half a percentage point to global economic growth each year if developed and deployed properly.
Georgieva called for stronger preparations and regulatory safeguards to manage the risks associated with AI, including potential job losses, cybersecurity threats, financial instability and the possibility of increasingly advanced AI systems becoming difficult for humans to control.
She also urged governments to strengthen public finances, improve workforce skills, make it easier to create and close businesses, improve energy security and reduce unnecessary regulations in order to support long-term growth.
