IMF managing director Kristalina Georgieva said oil still near $100 a barrel, record public debt and an AI investment boom are pulling the world economy in opposite directions.
International Monetary Fund managing director Kristalina Georgieva said on Wednesday that high energy prices, record public debt and risks from the artificial-intelligence investment boom threaten global growth. Reuters reported the speech, given in Singapore ahead of next week's IMF and World Bank meetings in Bangkok.
Georgieva said the world is being pulled by a negative energy supply shock from Middle East conflicts and a positive demand shock from AI that is also adding to inflation. She said the combined effect is uneven and that the AI boom is bypassing many countries.
She said new forecasts to be released in Bangkok will show the biggest growth downgrades in economies damaged by war, including Ukraine and Gulf countries hit by Iranian strikes and lower energy exports. She did not say whether the July forecast of 3.0 percent global growth in 2026 would change. That forecast assumed the Strait of Hormuz would begin reopening in mid-July.
Georgieva said oil remains at $100 a barrel and that impaired refining adds about another $100 a barrel in crack-spread margins for products including diesel. She said US, German and Japanese 10-year yields are at their highest since 2007, 2009 and 1996. Public debt is the highest since the Second World War and is projected to exceed 100 percent of GDP before 2030.
She called recent rate rises by the Federal Reserve, the European Central Bank and the Bank of Japan highly appropriate, and said a market disappointment on AI could become a far-reaching shock. She also said IMF research suggests AI, done right, could add half a percentage point of world growth a year.
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- Kristalina Georgieva said the energy shock and the AI boom are pulling the world economy in opposite directions.
- Georgieva said advanced economies, led by the United States, are the worst offenders on debt loads.
- Georgieva said rate rises by the Fed, the ECB and the Bank of Japan were highly appropriate.