IMF Warns Global Economy of Energy Shocks, Surging AI Demand
Washington: International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Wednesday that the global economy faces a double squeeze from a negative energy supply shock and a positive artificial intelligence (AI) demand shock.Speaking in Singapore ahead of the upcoming Annual Meetings in Thailand, she said the world economy must navigate three major crosscurrents: the…
Washington: International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Wednesday that the global economy faces a double squeeze from a negative energy supply shock and a positive artificial intelligence (AI) demand shock.
Speaking in Singapore ahead of the upcoming Annual Meetings in Thailand, she said the world economy must navigate three major crosscurrents: the rapid arrival of AI, persistently high energy prices and record levels of public debt.
Georgieva said global public debt is on track to soon exceed 100 percent of GDP, its highest level since the end of World War II. She noted that advanced economies are the worst offenders, carrying the heaviest overall debt burdens.
She said oil prices are hovering near $100 a barrel due to transport costs and other risks, while natural gas supplies from the Gulf are severely disrupted as shipments through the Strait of Hormuz face threats.
On technology, Georgieva said AI hardware and related products now account for more than 10 percent of global goods trade. If countries manage it well, she added, AI could ultimately add 0.5 percent to annual global growth.
She urged policymakers to stop delaying necessary measures and implement credible fiscal consolidation plans. She also advised central banks to remain prudent in their monetary policies, as the AI build-out, energy shocks and high public debt can all fuel inflation.
