FOCUS – IMF: The global economy faces energy pressure from AI demand

GENEVA, 7 October /ATSH-AA/ – The global economy faces dual pressures from a negative energy supply shock and a positive demand shock for artificial intelligence (AI), the head of the International Monetary Fund, Kristalina Georgieva, said today.

She delivered a speech in Singapore ahead of the upcoming annual meetings in Thailand, stressing that the global economy must face three main challenges: the rapid spread of AI, persistently high energy prices and record levels of public debt.

Georgieva said global public debt is expected soon to exceed 100 percent of Gross Domestic Product, reaching the highest levels since the end of the Second World War. Advanced economies stand out as the biggest offenders, with some of them having the highest gross debt levels, Georgieva said.

The managing director stressed that opposing forces are pulling the global economy in two different directions. Georgieva warned that oil prices remain around 100 dollars per barrel due to transport costs and other risks.

She stressed that natural gas supply from the Gulf has been badly damaged, as transport through the Strait of Hormuz faces threats. As for technology, Georgieva said AI equipment and related products already make up more than 10 percent of world trade in goods.

The IMF chief added that AI could eventually bring up to 0.5 percent additional growth to the world economy each year, if countries manage it properly. Georgieva called on economic policymakers not to postpone necessary actions any longer and to implement credible plans for fiscal consolidation.

She advised central banks in different countries to maintain a cautious approach, but oriented towards tighter monetary policies, as the AI investment boom, energy shocks and high public debt fuel inflation.