Singapore: International Monetary Fund Managing Director Kristalina Georgieva has warned that the global economy is facing growing risks from the energy shock caused by conflicts, rising public debt and the rapid expansion of artificial intelligence investment.
Speaking in Singapore ahead of the IMF and World Bank Annual Meetings in Bangkok, Georgieva said the world economy was being affected by several major forces at the same time. While investment in artificial intelligence is supporting economic activity, higher energy prices, rising borrowing costs and heavy government debt are putting pressure on countries.
Georgieva said oil prices were still around $100 a barrel and warned that energy costs could remain high even if the Middle East conflict ends soon. Damage to energy infrastructure, disruption to refining capacity and continuing risks to shipping are making it harder for energy markets to return quickly to normal conditions.
The Strait of Hormuz remains important to global energy markets because large amounts of oil and liquefied natural gas pass through the waterway. Threats to shipping through the strait have added to the cost and difficulty of moving energy supplies.
In its July economic outlook, the IMF assumed an average oil price of about $89 a barrel for 2026. The same forecast projected global economic growth of 3.0 percent in 2026 and 3.4 percent in 2027.
However, Georgieva's latest comments highlight new pressure on some of the economic conditions behind that forecast. The IMF is due to release updated economic forecasts during its annual meetings in Bangkok, with the World Economic Outlook press briefing scheduled for October 13.
Georgieva said the forthcoming IMF forecasts were expected to show the largest growth downgrades in economies directly affected by the war, including Ukraine and Gulf countries facing the effects of attacks and disruptions to energy exports.
She also warned about the growing burden of public debt. Global public debt is projected to exceed 100 percent of global GDP before 2030, according to the IMF.
Higher borrowing costs are making the situation more difficult. Georgieva said government bond yields in major economies, including the United States, Germany and Japan, had risen to their highest levels in decades.
Higher yields increase the cost of borrowing for governments and can reduce the money available for other public priorities.
Georgieva called on governments to strengthen their finances and prepare credible plans to control debt. She also said central banks would need to keep monetary policy focused on controlling inflation.
At the same time, Georgieva highlighted the economic opportunities created by artificial intelligence. IMF research suggests that AI could add about 0.5 percentage points to global economic growth each year.
However, she warned that the rapid investment required to build AI infrastructure could also create financial risks. Large technology companies and investors are committing huge amounts of money to data centres, computing capacity and other infrastructure needed for AI services.
Georgieva warned that if expected earnings from AI investments fall short, the resulting disappointment could cause a wider shock in financial markets. She also pointed to concerns about employment and the unequal distribution of the benefits of new technology.
The benefits of the AI boom are already uneven. Economies with strong technology industries, including China, India, Japan, South Korea and Taiwan, are benefiting more from the expansion of AI investment and trade.
Many other economies are receiving fewer benefits from the AI boom while also facing pressure from high energy prices and borrowing costs.
Georgieva said governments need to prepare workers for changes brought by new technology and ensure that the gains from AI are shared more widely.
Her warning comes as the global economy tries to manage several competing pressures. Energy disruptions are increasing costs, governments are carrying heavy debt burdens, and investors are putting large sums into a technology sector that could significantly influence future growth.
The new IMF forecasts expected during the Bangkok meetings will provide a clearer picture of how these developments are affecting the global economy. Georgieva urged governments to act on debt, inflation, energy security and the risks associated with AI as they prepare for continued global economic uncertainty.