Speaking in Singapore ahead of the IMF and World Bank’s annual meetings in Bangkok, Georgieva described Middle East conflicts as a negative shock to energy supply. At the same time, she said, heavy AI investment is creating a positive demand shock that is also adding to inflation, Reuters reported.
Energy and debt squeeze budgets
Georgieva said high energy prices are feeding inflation, interest rates and government borrowing costs. She also warned that the strain could persist even if the Gulf war ends soon, with the winter heating season adding demand while natural gas supplies remain constrained.
The IMF says global public debt is at its highest level since World War II and is projected to exceed 100% of gross domestic product before 2030. Georgieva said advanced economies, led by the United States, carry especially heavy debt loads and can no longer rely on faster growth alone to solve their fiscal problems.
She called for credible medium-term plans to bring public finances under control, alongside monetary policy focused on price stability. Georgieva also stressed that central banks need to remain independent rather than ease policy to reduce pressure on government finances.
AI brings upside and systemic risk
Georgieva said AI investment as a share of the economy is likely to exceed the scale of spending that built railroads, electricity grids or telecommunications networks. That buildup has supported corporate earnings and growth, but its gains have not reached every country equally.
The concentration of spending also raises financial risks. Georgieva warned that if AI companies fail to deliver the expected productivity and earnings gains, leverage among large technology firms and broad global exposure to U.S. equities could turn disappointment into a wider shock.
The upside remains substantial. Georgieva cited IMF research suggesting that well-managed AI could add about half a percentage point to annual global growth. An Associated Press report published by ABC News said she urged governments to pair AI regulation with worker training, more flexible labor markets, support for entrepreneurship and stronger energy security.
The IMF’s next growth forecasts are due during the Bangkok meetings. Reuters reported that Georgieva did not indicate whether the fund would change its July forecast of 3% global growth for 2026.
