IMF warns energy shock

According to Business Recorder, IMF Managing Director Kristalina Georgieva cautioned on Wednesday that the global economy faces pressure from costly energy, record public borrowing and the AI investment surge. Speaking ahead of next week's IMF and World Bank Annual Meetings in Bangkok, she urged governments to adopt protective fiscal and monetary measures.

She described a world pulled in two directions, with an energy supply shock from Middle East conflicts on one side and an AI-driven demand shock on the other, which is also stoking inflation. The impact is highly uneven, she said, as the AI boom passes many countries by. Forthcoming IMF growth forecasts are expected to show the steepest downgrades for war-hit economies, including Ukraine and Gulf states struck by Iranian attacks.

Georgieva said crude is still priced at $100 a barrel, while impaired refining capacity adds another $100 in crack-spread margins per barrel for products such as diesel. She warned that high energy prices are likely to persist for some time even if the Gulf war ends soon, while higher inflation and rising bond yields are already visible. She also flagged advanced economies, with the United States at the forefront, for heavy debt loads and called for credible medium-term fiscal consolidation plans.