IMF chief warns energy shock, growing debt and AI risks threaten global growth

IMF chief Kristalina Georgieva cautioned that the global economy faces threats from high energy prices, mounting public debt, and risks associated with the rapid growth of artificial intelligence. Speaking ahead of the IMF and World Bank Annual Meetings in Bangkok, Georgieva highlighted that energy supply disruptions from Middle Eastern conflicts and the AI-driven demand surge are causing uneven impacts worldwide.

She noted that AI is outpacing many economies in its development, leaving some countries lagging behind. The IMF's upcoming growth forecasts for 2026 are expected to show the most significant declines in countries affected by war, such as Ukraine and Gulf nations. Despite uncertainties in the oil market, with prices hovering around $100 a barrel, Georgieva warned that high energy costs will likely persist due to restricted natural gas supplies and disrupted refining capacity.

The IMF also reported that public debt has reached unprecedented levels, surpassing 100% of GDP for some countries, particularly advanced economies like the US. Georgieva emphasized that governments need to implement fiscal consolidation plans to address these issues, rather than solely relying on growth to solve fiscal problems.

Additionally, she cautioned about the risks posed by AI, suggesting that while it could contribute to global growth, mismanagement could lead to significant economic shocks. Georgieva called for prudent monetary policy adjustments, including potential rate hikes, to combat inflation driven by various factors such as AI development, energy prices, food costs, and increased defense spending.