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

International Monetary Fund Managing Director Kristalina Georgieva warned that the global economy is facing threats from persistently high energy prices, record public debt, and risks from the AI investment boom. In her speech at the preview of IMF and World Bank Annual Meetings in Bangkok, Georgieva highlighted two forces pulling the world in opposite directions - a negative energy supply shock due to conflicts in the Middle East and a positive demand shock from AI fueling inflation.

The combined impact of these forces affects economies in different ways, with those ravaged by war like Ukraine and Gulf countries, which have been hit by Iranian strikes and reduced energy exports, likely experiencing the most significant growth downgrades. Georgieva did not confirm if the IMF's latest World Economic Outlook would alter the 2026 global growth forecast, which was initially predicted at 3.0% in July, with a rebound to 3.4% by 2027.

However, she did mention that oil prices remain at $100 a barrel, with impaired refining capacity adding further margins to key products like diesel. Even if the war in the Gulf were to end, high energy prices are expected to persist for some time due to restricted natural gas supplies. Georgieva emphasized that growing public debt is a major concern, with the IMF projecting it to exceed 100% of GDP before 2030, especially in advanced economies like the US.

She urged policymakers to focus on credible medium-term fiscal consolidation plans and creditible fiscal measures to address the issue. Georgieva also warned about the risks associated with AI, noting that investment as a share of GDP is likely to exceed that of other infrastructure sectors. She warned that market disappointment could lead to a far-reaching shock, but highlighted that AI could still add half a percentage point of extra world growth annually if done right.

Georgieva stressed the importance of regulatory guardrails to manage AI's substantial perils, including large-scale labor market fallout, cyber risks, and the threat of frontier models escaping human control.