Iran war energy price shock large but contained so far, IMF chief says
The head of the International Monetary Fund has said the energy price shock driven by the US- Iran war has so far been “large but contained”, but warned that energy demand could lead to further pressure. “Even if the war in the Gulf were to end soon, the problem of high energy prices would likely persist for some time,” managing director Kristalina Georgieva said in prepared remarks in Singapore…
The head of the International Monetary Fund has deemed the energy price shock originating from the US-Iran war to be significant yet currently manageable, according to prepared remarks ahead of the IMF and World Bank annual meetings in Bangkok. Despite the end of the Middle East conflict, the IMF predicts high energy prices will continue to exert pressure for an extended period.
This has pushed key economies to raise their interest rates, with the Bank of England set to follow suit next month. The yield on the 10-year US Treasury, a key benchmark for global borrowing costs, reached 5.307% as of Monday, its highest level since 2002. The IMF also attributes this to the GCC's efforts in rerouting energy supplies, which have averted a larger economic disruption.
However, the World Bank forecasts a 4.3% contraction in GCC economies this year, a significant revision from their April forecast. The report also highlights that supply interruptions in liquefied natural gas will disproportionately affect buyers in Europe and Asia as winter approaches and reserves dwindle. Furthermore, the AI revolution is being hailed as a major economic driver, with the US investing $10.3 trillion in AI-related infrastructure from 2025 to 2032, or 3.63% of its GDP annually.
IMF chief Kristalina Georgieva urges governments to adopt policies to harness AI's productive potential, warning of the risk of widening economic inequality.
Written by urgent.news from The National UAE's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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