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Kristalina Georgieva calls for tighter fiscal discipline and a “prudently hawkish” monetary policy as high energy prices, rising debt and AI investment fuel inflation risks.
The global economy faces mounting risks from high energy prices, record public debt and the rapid expansion of artificial intelligence investment, International Monetary Fund Managing Director Kristalina Georgieva warned on Wednesday.
Speaking ahead of the IMF-World Bank Annual Meetings in Bangkok, Georgieva said the global 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 from the AI boom.
The IMF is set to release updated global growth forecasts during the meetings. Georgieva did not signal whether the Fund would revise its July forecast for 3 per cent global growth in 2026 and 3.4 per cent in 2027.
She said oil prices remained around $100 a barrel, while disruptions to refining capacity were pushing up fuel costs. Restrictions on LNG shipping through the Strait of Hormuz could also keep natural gas supplies tight, adding to inflationary pressures through the winter.
Higher energy prices are already feeding into inflation, interest rates and bond yields, Georgieva said. US, German and Japanese 10-year government bond yields have reached their highest levels in decades.
The IMF chief also warned that global public debt has reached its highest level since World War Two and is projected to exceed 100 per cent of global GDP before 2030.
More from BusinessAdvanced economies, particularly the US, are carrying some of the heaviest debt burdens. Georgieva said governments could no longer depend on stronger economic growth alone to repair 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 ease fiscal strains.
Georgieva also said AI investment could eventually add around 0.5 percentage point to global growth each year but warned that the boom also carries significant financial and economic risks. The concentration of investment in AI companies is increasing pressure on firms to deliver productivity gains and justify high valuations.
A sharp market disappointment could therefore trigger a broader financial shock.
She called for stronger AI safeguards, citing risks including labour-market disruption, cyber threats and financial instability.
