The Global Economy Between Energy and Technology Risks
The global economy has entered a new phase in which energy shocks are intertwined with rising government debt, as an investment boom in artificial intelligence drives up demand, investment, and inflation, creating a more complex economic equation for central banks and markets. International Monetary Fund Managing Director Kristalina Georgieva warned that the global economy is moving between two opposing shocks: a negative one stemming from energy supply disruptions caused by conflicts in the Middle East, and a positive one led by a wave of demand and investment linked to artificial intelligence, which may simultaneously exert inflationary pressures. The situation is becoming more sensitive with expectations that global public debt will soon surpass the 100% threshold of global gross domestic product, leaving governments with a narrower fiscal maneuvering space, especially if energy prices continue to rise and inflation resumes its upward trajectory.
The energy shock is quickly materializing in oil markets, with Brent crude rising to $101.51 per barrel and US West Texas Intermediate crude climbing to $90.25, amid concerns that US production could be affected by a storm heading toward the Gulf of Mexico. On the other side of the equation, US President Donald Trump views the strength of the dollar as a reflection of the strength of the US economy and a factor that helps curb inflation. Meanwhile, the Reserve Bank of India’s move underscores the broadening concern over inflation, after it raised its repo rate by 25 basis points to 5.5%, marking the first increase since 2023.
Improved oil sentiment was reflected in Kuwait Stock Exchange indices, which closed the day with the general index up 13.46 points, or 0.16%, to reach 8,667.50 points, amid trading volumes of 304.4 million shares across 22,043 transactions valued at 80.16 million dinars. Gold moved under pressure from the strengthening dollar and rising bond yields, with the spot price falling by about 0.98% to $4,122.73 per ounce, as markets awaited the Federal Reserve’s meeting minutes for new signals on the interest rate path.
