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IMF's Georgieva Warns of AI Boom, USD100 Oil, Record Debt
(MENAFN) The global economy is caught between a negative energy supply shock and a positive artificial intelligence demand shock, International Monetary Fund chief Kristalina Georgieva said Wednesday.
Speaking in Singapore ahead of the upcoming annual meetings in Thailand, Georgieva said the world economy must steer through three major crosscurrents: the rapid arrival of AI, persistently elevated energy prices and record public debt. The IMF managing director described opposing forces pulling the economy in two directions at once.
On debt, Georgieva said global public borrowing is on track to soon surpass 100% of gross domestic product, the highest level since the end of World War II. She singled out advanced economies as the worst offenders, with some of the heaviest gross debt loads.
On energy, she cautioned that oil prices are hovering near $100 per barrel because of transport costs and other risks. Natural gas supply from the Gulf remains severely impaired, she added, as shipping through the Strait of Hormuz faces threats.
The technology picture points the other way. AI hardware and related products now make up more than 10% of world goods trade, Georgieva said. If countries manage the technology correctly, she added, AI could eventually add up to 0.5% of extra global growth each year.
Georgieva urged economic policymakers to stop putting off necessary action and to adopt credible fiscal consolidation plans. She also advised central banks in various countries to keep a prudently hawkish bias in monetary policy, since the AI building boom, energy shocks and high public debt are all fueling inflation.
Speaking in Singapore ahead of the upcoming annual meetings in Thailand, Georgieva said the world economy must steer through three major crosscurrents: the rapid arrival of AI, persistently elevated energy prices and record public debt. The IMF managing director described opposing forces pulling the economy in two directions at once.
On debt, Georgieva said global public borrowing is on track to soon surpass 100% of gross domestic product, the highest level since the end of World War II. She singled out advanced economies as the worst offenders, with some of the heaviest gross debt loads.
On energy, she cautioned that oil prices are hovering near $100 per barrel because of transport costs and other risks. Natural gas supply from the Gulf remains severely impaired, she added, as shipping through the Strait of Hormuz faces threats.
The technology picture points the other way. AI hardware and related products now make up more than 10% of world goods trade, Georgieva said. If countries manage the technology correctly, she added, AI could eventually add up to 0.5% of extra global growth each year.
Georgieva urged economic policymakers to stop putting off necessary action and to adopt credible fiscal consolidation plans. She also advised central banks in various countries to keep a prudently hawkish bias in monetary policy, since the AI building boom, energy shocks and high public debt are all fueling inflation.
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