‘Countries are defying gravity’: how much longer can global economy resist chaos?
Sky-high oil prices and geopolitical turmoil have made less of a dent than feared … just don’t bank on it to last Inside the vast, glass-walled Queen Sirikit conference centre in Bangkok, the air-conditioned atmosphere was calm as policymakers from more than 100 countries gathered this week for the International Monetary Fund’s annual meeting – and contemplated the surprising strength of the…
Bangkok hosted the International Monetary Fund’s annual meeting, where policymakers from over 100 countries discussed the surprising strength of the global economy. Despite high oil prices and geopolitical turmoil, the economy has shown resilience, defying expectations. IMF experts noted that the cost of energy support measures to protect citizens from soaring oil prices has been an extraordinary 0.5% of global GDP.
They warned that many countries would struggle to maintain this level of support for long, and some have begun to phase out subsidies, leaving citizens exposed to the conflicts' costs.
The IMF highlighted two major risks: unsustainable public finances, particularly in wealthy countries, and the potential for an AI market crash. Public debt in advanced economies is expected to rise, with government debt in these countries projected to increase from 108% of GDP last year to 115% of GDP in five years. The IMF's managing director, Kristalina Georgieva, criticized countries for not using pandemic recovery to improve fiscal buffers, as new shocks have pushed debt levels higher.
Georgieva urged governments to address their fiscal issues before the situation worsened. Not all heads of state attended the meeting; US Treasury Secretary Scott Bessent and UK Chancellor John Healey were notably absent. The UK received a positive review for its deficit reduction efforts, but the bond market did not reward its prudence. The IMF also warned about the potential for an AI market crash due to expectations outpacing productivity gains.
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