IMF Managing Director: Energy Shock, Rising Debt, and AI Risks Threaten Global Growth

IMF Managing Director Kristalina Georgieva warned today that the global economy faces threats, including persistent energy price hikes, public debt reaching unprecedented levels, and risks stemming from the artificial intelligence investment boom, urging governments to adopt preventive fiscal and monetary policy measures.

In a speech delivered ahead of the annual meetings of the IMF and World Bank, scheduled for next week in Bangkok, Georgieva said the world is being pulled in two directions: a negative shock due to energy supply disruptions caused by conflicts in the Middle East, and a positive shock driven by demand for artificial intelligence, which also fuels inflation.

She noted that the IMF’s new growth forecasts, to be released during the Bangkok meetings, will show that the largest downward revision in growth projections will occur in war-devastated economies.

This forecast, which estimates growth recovery to 3.4 percent in 2027, is based on the assumption that the Strait of Hormuz will be reopened in mid-July and return to pre-war conditions by March 2027.

It was also assumed that average oil prices would reach $89 per barrel in 2026 and $78 per barrel in 2027.

Georgieva said oil prices remain at $100 per barrel, with refining capacity constraints adding another $100 per barrel to the “refining margin” for key products such as diesel.

She added that the winter heating season would boost demand amid ongoing restrictions on natural gas supplies due to threats to LNG shipments through the Strait of Hormuz.

She noted that rising energy prices are driving up inflation, official interest rates, and bond yields, pointing out that 10-year sovereign bond yields in the United States, Germany, and Japan have reached their highest levels since 2007, 2009, and 1996, respectively, and continue to rise.