Singapore: International Monetary Fund Managing Director Kristalina Georgieva has warned that high energy prices, rising public debt and risks linked to the artificial intelligence investment boom could weigh on global economic growth.
Speaking ahead of next week’s IMF and World Bank Annual Meetings in Bangkok, Georgieva said the global economy was facing two opposing forces: an energy supply shock linked to conflicts in the Middle East and stronger demand driven by AI investment, which is also contributing to inflation.
Georgieva said the impact was uneven across countries, with the benefits of the AI boom bypassing many economies. She also said the IMF’s latest growth forecasts would show the largest downgrades in economies affected by war, including Ukraine and Gulf countries affected by Iranian strikes and reduced energy exports.
She did not indicate whether the IMF would revise its July forecast for global growth of 3% in 2026. The IMF had previously projected global growth of 3.4% in 2027.
Why is the IMF concerned about high energy prices?
Georgieva said oil prices remained around $100 a barrel, while impaired refining capacity had increased margins for key products such as diesel. She warned that higher demand during the winter heating season could add further pressure as natural gas supplies remain restricted by risks to liquefied natural gas shipments through the Strait of Hormuz.
She said high energy prices could persist even if the Gulf conflict ends soon, with Brent crude futures indicating elevated prices through 2027.
Higher energy costs are also pushing up inflation, interest rates and government bond yields. Georgieva noted that 10-year sovereign yields in the United States, Germany and Japan had reached their highest levels in years.
How is rising public debt affecting global growth?
Georgieva said growing public debt was adding to inflationary pressure and weakening economic growth. The IMF estimates that global public debt is at its highest level since World War Two and could exceed 100% of global GDP before 203