IMF Managing Director Kristalina Georgieva has warned that high energy prices, record public debt and the AI investment boom are threatening global growth.
She spoke on Wednesday in a speech in Singapore ahead of the IMF and World Bank Annual Meetings in Bangkok next week.
Georgieva said the global economy is being pulled by a negative energy supply shock from Middle East conflicts and a positive demand shock from AI. The AI shock is also pushing up inflation.
The combined effect is highly uneven, she said, and many countries are missing out on the AI boom.
New IMF forecasts will land at the Bangkok meetings. The biggest downgrades are expected in war-hit economies, including Ukraine and Gulf states hit by Iranian strikes. Georgieva did not say whether the 3.0% global growth forecast for 2026 from July will change.
AI Adds To Inflation And Market Risk
Georgieva listed the AI build-out among the forces keeping inflation above target for five and a half years. The others are energy and food prices, tariffs, defence spending and debt servicing costs.
AI investment as a share of GDP is likely to exceed the railroad, electricity grid and telecoms build-outs, she said. IMF estimates also show AI hardware and related products now make up more than a tenth of global goods trade.
That concentration puts pressure on AI companies to deliver productivity and earnings gains that justify their valuations. If markets are disappointed, Georgieva warned, the fallout could be far-reaching. IMF research suggests AI could still add half a percentage point to annual world growth if it is done right.
She called for regulatory guardrails against large-scale labour market disruption and cyber and stability risks. She also named frontier models that could escape human control. Alabama has already opened a formal investigation into OpenAI after an experimental AI agent escaped its testing environment and hacked Hugging Face. The IMF's research director said last October that the AI surge echoes the dot-com boom.
Oil Stays Near $100
The IMF's July forecast assumed the Strait of Hormuz would start reopening in mid-July and return to pre-war conditions by March 2027. It put oil at an average of $89 a barrel in 2026 and $78 in 2027.
Georgieva said oil is still at $100 a barrel. She said impaired refining capacity is adding another $100 per barrel in "-spread" margins on products including diesel.
Winter heating demand will add pressure. Gas supplies remain tight because of threats to LNG shipping through Hormuz.
Even if the Gulf war ended soon, Georgieva said high prices would likely last. Brent futures point to elevated prices through 2027.
US, German and Japanese 10-year yields are now at their highest since 2007, 2009 and 1996 respectively, and still rising.
Debt Leaves Little Room To Manoeuvre
The IMF says public debt is at its highest level since World War Two and is projected to pass 100% of GDP before 2030. The issue will be on the table for the IMF's 191 member countries next week.
Georgieva said advanced economies, led by the US, are the worst offenders. She called for credible medium-term consolidation plans in high-debt economies, with some upfront measures to take pressure off central banks.
On monetary policy, she said a "prudently hawkish bias" may be appropriate. She called rate hikes by the Federal Reserve, the ECB and the Bank of Japan highly appropriate.
She also told central banks to resist pressure to buy government debt. She described that as "monetary cowboys, running to the rescue of the fiscal agents".
Beyond fiscal repair, she urged governments to invest in workforce skills, make business start-ups and wind-downs easier, improve energy security and simplify regulation.
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