Bangkok — The global economy is facing mounting risks from elevated energy costs, record public debt and the rapid expansion of artificial intelligence investment, International Monetary Fund Managing Director Kristalina Georgieva warned on Wednesday.
Speaking ahead of next week’s IMF and World Bank Annual Meetings in Bangkok, Georgieva said the economic outlook had become increasingly complex, with the global economy being pushed in two opposing directions.
The conflict in the Middle East is creating a negative supply shock by disrupting energy supplies, while the rapid growth of artificial intelligence is generating a positive demand shock that is also adding to inflationary pressures.
The impact differs significantly between economies. Georgieva said the AI boom was passing many countries by, while nations directly affected by war were bearing the heaviest economic costs.
The IMF is scheduled to release its latest growth forecasts during the Bangkok meetings. Georgieva said the largest downward revisions would be concentrated among economies hit by war, including Ukraine and Gulf countries affected by Iranian strikes and lower energy exports.
She did not say whether the IMF would revise its overall 2026 global growth forecast of 3.0%, released in July. That projection assumed the Strait of Hormuz would begin reopening in mid-July and return to pre-war conditions by March 2027.
The July outlook also assumed average oil prices of $89 a barrel in 2026 and $78 a barrel in 2027.
Those assumptions are coming under pressure as oil prices remain near $100 a barrel. Georgieva said reduced refining capacity was adding another $100 in crack-spread margins per barrel for key products including diesel.
Winter heating demand could put additional strain on energy markets, she said, while natural-gas supplies remain constrained by threats to liquefied natural gas shipments through the Strait of Hormuz.
Even if the Gulf conflict ends soon, Georgieva said elevated energy prices could remain for some time. Brent crude futures also point to the possibility that high oil prices will persist through 2027.
Rising energy costs are already affecting inflation, interest rates and government bond yields. Georgieva noted that 10-year government bond yields in the United States, Germany and Japan are now at their highest levels since 2007, 2009 and 1996, respectively.
Public debt is another major concern. The IMF says global public debt is at its highest level since World War Two and is expected to surpass 100% of global GDP before 2030.
Georgieva said governments could no longer rely on economic growth alone to solve their fiscal challenges. She called for credible medium-term fiscal consolidation plans, particularly in highly indebted advanced economies.
Inflationary pressures are also coming from multiple sources, including AI investment, energy and food shocks, tariffs, increased defense spending and rising debt-servicing costs.
Georgieva said a “prudently hawkish bias” in monetary policy could be appropriate in many countries. She also described recent interest-rate increases by the Federal Reserve, European Central Bank and Bank of Japan as highly appropriate.
At the same time, she highlighted financial risks linked to the AI investment boom. AI investment as a share of GDP could surpass levels seen during the development of railroads, electricity grids or telecommunications infrastructure.
Because investment and market value are concentrated among AI companies, weaker-than-expected productivity or earnings could trigger a broader financial shock.
Still, Georgieva said AI could add 0.5 percentage points to global economic growth each year if it is developed effectively.
She urged governments to improve workforce skills, strengthen energy security, streamline regulation and put safeguards around AI in place, including measures addressing labor-market disruption, cybersecurity and financial stability.
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