IMF Warns of Global Implications of Attacks on Saudi Arabia

Kuala Lumpur, October 14 (KUNA) -- Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), warned on Wednesday that the recent attacks on Saudi Arabia could have negative economic repercussions spreading worldwide, amid disruptions in energy markets caused by the war in the Middle East. Speaking at a press conference in Bangkok, the Thai capital, on the sidelines of the IMF and World Bank annual meetings, Georgieva said, “The Saudi economy is of great importance to the region and the world, and recent developments could negatively affect everyone.”

In this context, she praised the economic and financial reforms implemented by Gulf Cooperation Council (GCC) countries to strengthen their capacity to withstand external shocks by diversifying sources of economic growth and building financial reserves and buffers to help absorb the impacts of crises.

Georgieva’s remarks came during a review of the 2026 Global Policy Agenda, in which she warned that the global economy’s resilience to repeated shocks and uncertainty is nearing its limits, as energy reserves and financial buffers are being depleted and high inflation persists in many countries, despite some economies benefiting from expanded investments in artificial intelligence (AI).

She explained that global economic growth is now influenced by two opposing forces: a negative supply shock to energy stemming from the war in the Middle East, and a positive demand shock driven by the expansion of AI investments. She added that economies more integrated into AI supply chains are performing better than others, with many located in Asia, alongside energy-exporting countries that have not been affected by the wars. Meanwhile, low-income, fragile, and conflict-affected countries are bearing the brunt of the economic fallout, particularly energy-importing nations or those not benefiting from the technological boom.

She warned that the expansion of AI could widen the economic gap between rich and developing countries, amid declining international development assistance and rising borrowing, food, and energy costs. She noted that debt service burdens in developing countries rose on average from 6% to 14% of their revenues over the past decade.

Georgieva stressed that advanced economies are this time falling short in addressing fiscal imbalances, urging governments to implement urgent reforms before these imbalances widen, through boosting revenues, rationalizing spending, and improving public financial management. She added that current economic conditions may require many countries to adopt cautious, tightening monetary policies to contain inflation, alongside improving the business environment, enhancing competition, investing in digital infrastructure and energy, and developing labor market policies.

Regarding major economies, Georgieva called on China to rebalance its economic model by boosting domestic consumption and reducing reliance on exports. She urged the United States to increase savings and address its fiscal and economic imbalances, and called on European economies to expand investments to enhance their competitiveness.

She warned that U.S. economic growth alone would not be sufficient to reduce the public debt, which has surpassed $40 trillion, emphasizing the need for additional fiscal measures to address the deficit and ensure long-term debt sustainability.

In a related development, member states of the International Monetary Fund (IMF) called for strengthening the resources of the IMF’s Growth and Poverty Reduction Trust, which provides concessional financing to low-income countries to contain disasters and alleviate debt burdens. The IMF reaffirmed its responsibility to assist member states in addressing divergent economic trends, emphasizing that international cooperation and joint action represent the most effective means of confronting growing economic and financial risks. Bangkok is hosting the annual meetings of the IMF and the World Bank from October 12 to 18, with a broad Kuwaiti and international participation comprising thousands of financial and economic officials to discuss global economic and financial challenges and ways to enhance monetary and investment cooperation. (End) KNA / S.M.