IMF Chief Warns Energy Shock, Debt And AI Boom Could Weigh On Global Growth

International Monetary Fund Managing Director Kristalina Georgieva has warned that high energy prices, record public debt and a rapid expansion in artificial intelligence investment could create fresh risks for the global economy, even as the AI boom provides a boost to growth.

Speaking ahead of the IMF-World Bank Annual Meetings in Bangkok, Georgieva said the world economy was being pulled in opposite directions by a negative energy supply shock linked to conflicts in the Middle East and a positive demand shock driven by AI investment.

The IMF is due to release updated global growth forecasts during the meetings. Georgieva did not indicate whether the Fund would change its July projections for 3 per cent global growth in 2026 and 3.4 per cent in 2027.

She said oil prices were still around $100 a barrel, while disruptions to refining capacity were driving fuel costs higher. Restrictions on LNG shipping through the Strait of Hormuz could also keep natural gas supplies tight, adding to inflationary pressure through the winter.

Higher energy costs are already feeding into inflation, interest rates and bond yields, Georgieva said. Yields on 10-year government bonds in the US, Germany and Japan have reached their highest levels in decades, adding to borrowing pressures for governments and businesses.

The IMF chief also highlighted the growing threat posed by record public debt. Global public debt has reached its highest level since World War Two and is expected to surpass 100 per cent of global GDP before 2030.

Advanced economies, particularly the US, face some of the heaviest debt burdens. Georgieva said governments could no longer rely solely on stronger economic growth to repair their public finances and called for credible medium-term fiscal consolidation plans.

She also urged central banks to maintain a “prudently hawkish bias” to keep inflation under control and resist political pressure to loosen monetary policy simply to ease fiscal pressures.

At the same time, Georgieva acknowledged that the AI investment boom could provide a significant boost to the world economy. She said AI could eventually add around 0.5 percentage point to global growth each year.

But the rapid concentration of investment in AI companies also carries financial risks. Companies face growing pressure to deliver productivity gains that justify their high valuations. A sharp disappointment in AI-related returns could trigger a broader financial shock, she warned.

Georgieva called for stronger AI safeguards, pointing to potential risks from labour-market disruption, cyber threats and financial instability as the technology expands rapidly across economies.