The International Monetary Fund (IMF) has warned that the world is being pulled in two directions: a negative energy supply shock from conflicts in the Middle East, and a positive demand shock from artificial intelligence (AI) that is also fuelling inflation. Record public debt is shrinking governments’ room to respond.
IMF Managing Director Kristalina Georgieva named three forces shaping the global economy: the rapid rise of AI, persistently high energy prices and record levels of public debt. She spoke in Singapore on Wednesday, October 7, in a “curtain raiser” speech titled “Navigating the Crosscurrents of a Changing World Economy.”
The speech came ahead of the 2026 IMF and World Bank Annual Meetings, which run from October 12 to 18 in Bangkok, Thailand. The meetings bring together central bankers, finance and development ministers, private sector executives, civil society representatives and academics.
An uneven impact
Georgieva said the combined effect of the energy and AI forces is “highly uneven across the world,” and that the AI boom is bypassing many countries.
She said the Fund’s World Economic Outlook will show that global growth has held steady since the Spring, but with significant variations behind the averages. The new forecasts, due during the Bangkok meetings, will show the biggest growth downgrades in economies ravaged by war.
Georgieva did not say in her prepared remarks whether the overall 2026 global growth forecast would change from the sluggish 3.0 per cent projected in July.
The AI factor
AI hardware and related products now account for more than 10 per cent of world goods trade. She said growth in AI-related trade reflects an investment boom in the economies embedded in its value chain.
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Georgieva said AI could eventually add up to 0.5 per cent to world growth each year if countries manage it correctly. The speech also stressed the risks, particularly the added pressure on prices from the investment surge.
Debt: growth alone is not enough
On public finances, Georgieva’s message was blunt. She said global public debt is on track to soon exceed 100 per cent of world output, its highest level since the Second World War.
She singled out advanced economies, led by the United States, as the “worst offenders,” with debt-to-GDP ratios higher than those of emerging markets and low-income countries.
She said policymakers can no longer rely on faster growth alone to solve fiscal problems. She added that growth certainly helps. She urged policymakers to stop delaying necessary action and adopt credible fiscal consolidation plans.
Reforms to lift growth
Beyond building fiscal strength, even at a political cost, Georgieva said governments should pursue reforms that:
- improve workforce skills;
- make it easier to start up and wind down companies;
- strengthen energy security; and
- streamline regulations.
Call for cooperation
Georgieva called for decisive policy action, stronger growth and international cooperation to navigate an increasingly complex global landscape. She said members were keen to come together in Bangkok next week.
After the speech, she joined Singapore’s President, Tharman Shanmugaratnam, for a fireside chat. She praised Singapore as a country that has transformed its economy through prudent policies, sound institutions and collaboration with its neighbours and the wider world.
Sunday Michael Ogwu is a Nigerian journalist and editor of Pinnacle Daily. He is known for his work in business and economic reporting. He has held editorial roles in prominent Nigerian media outlets, where he has focused on economic policy, financial markets, and developmental issues affecting Nigeria and Africa more broadly.