IMF chief warns energy prices, debt and AI risks threaten global growth
IMF Managing Director Kristalina Georgieva warned on 7 October 2026 that high energy prices, record public debt and risks from AI investment threaten global growth. She urged governments to adopt protective fiscal and monetary policies ahead of the IMF-World Bank meetings in Bangkok.
International Monetary Fund Managing Director Kristalina Georgieva warned on Wednesday that the global economy faces threats from persistently high energy prices, record public debt and risks linked to the artificial-intelligence investment boom. She urged governments to adopt protective fiscal and monetary policy measures.
In a speech previewing the IMF and World Bank Annual Meetings next week in Bangkok, Georgieva said the world was being pulled in two directions — a negative energy supply shock from Middle East conflicts and a positive demand shock from AI that is also fuelling inflation. 'The combined impact of these two forces is highly uneven across the world,' she said, adding that the AI boom was bypassing many countries.
New IMF growth forecasts to be released during the Bangkok meetings will show the biggest growth downgrades will come in economies ravaged by war, Georgieva said. These include Ukraine and Gulf countries hit by Iranian strikes and sharply reduced energy exports. She did not indicate whether the IMF's latest World Economic Outlook would change the overall 2026 global growth forecast from the sluggish 3.0 per cent rate forecast in July, which assumed the Strait of Hormuz would start to reopen in mid-July and return to pre-war conditions by March 2027.
Georgieva said oil prices remain at US$100 a barrel, with impaired refining capacity adding another US$100 in 'crack-spread' margins per barrel for key products including diesel. The winter heating season will boost demand as natural gas supplies remain restricted by threats to LNG shipping through the Strait of Hormuz. 'Even if the war in the Gulf were to end soon, the problem of high energy prices will likely persist for some time,' she said, adding that Brent crude oil futures predict high oil prices through 2027.
Higher energy prices are pushing up inflation, policy rates and benchmark bond yields, she said, noting that US, German and Japanese 10-year sovereign yields are now at their highest levels since 2007, 2009 and 1996, respectively, and still climbing. The IMF says public debt is at the highest level since World War Two and is projected to exceed 100 per cent of GDP before 2030. Georgieva singled out advanced economies, led by the United States, as the 'worst offenders' on debt loads.
After five-and-a-half years of above-target inflation, Georgieva said inflationary pressures were persisting from the AI build-out, energy and food price shocks, tariffs, higher defence spending and higher debt service costs. She said rate hikes by the US Federal Reserve, the European Central Bank and the Bank of Japan were 'highly appropriate.'
Georgieva highlighted other risks from AI, where investment as a share of GDP is likely to exceed that of railroads, electricity grids or telecommunications infrastructure. She warned that market disappointment could turn into 'a far-reaching shock.' However, she said IMF research suggests that AI, done right, could add a half percentage point of extra world growth annually. AI preparedness is key, she said, including regulatory guardrails that 'help manage AI's substantial perils, which include large-scale labour market fallout, serious cyber and stability risks and frontier models threatening to escape human control and run amok.'