International Monetary Fund Managing Director Kristalina Georgieva stated that the artificial intelligence investment boom is expanding beyond the United States to other economies, progressively emerging as a new growth driver for the global economy. Concurrently, the energy shock triggered by the Iran war has inflicted less damage on the global economy than the IMF had previously feared.
Speaking at a press conference ahead of the Group of Twenty finance ministers' meeting on Tuesday, Georgieva noted that the AI phenomenon, which initially took root in the U.S., is now becoming a global growth engine as other nations accelerate the construction of data centers and related infrastructure. She characterized the current global economy as being embroiled in a "tug of war," with negative impacts from disrupted energy supplies in the Middle East Gulf region on one side, and growth momentum generated by the AI investment boom on the other. Compared with April, the risks to the global economic outlook have become more balanced, though they still tilt toward the downside.
Following the U.S. initiation of war against Iran in February, shipping through the Strait of Hormuz has contracted dramatically. Before the conflict, approximately one-fifth of global seaborne oil supplies transited this waterway. The closure of the strait has elevated global energy prices and intensified concerns over economic growth and inflation. However, Georgieva indicated that the global economy has shown greater resilience to the energy shock from the Hormuz closure than anticipated. Several factors have cushioned the impact, including the deployment of national oil and gas reserves, increased energy supply from outside the Gulf region, reduced energy demand, and expanded renewable energy capacity. A resurgence in coal-fired power generation in some regions has also alleviated supply pressures, with energy prices currently below their spring peaks.
Nevertheless, Georgieva cautioned that "the energy shock is not over yet." With oil and gas reserves continuing to decline and the northern hemisphere winter approaching, a resurgence in oil prices could reignite inflation and compel central banks to maintain restrictive monetary policies.
AI investment, meanwhile, is providing another source of strength. This current investment wave is most pronounced in the U.S., where it continues to underpin corporate earnings and consumer spending. Simultaneously, other countries are accelerating data center construction and expanding AI hardware supply, sharing in the demand generated by this capital expenditure growth beyond American borders. The IMF had already downgraded its 2026 global growth forecast to 3% in July, below the 3.5% projected for 2025, while warning that Middle East conflicts, trade fragmentation, and AI-related uncertainties could pose further downside risks. Georgieva did not provide new economic projections this time, as the IMF will update its global growth outlook during the IMF-World Bank annual meetings scheduled for mid-October in Bangkok.
Beyond the energy shock, Georgieva also highlighted deteriorating fiscal conditions. She stated that the global economy is contending with robust headwinds from high debt, persistent inflation, and trade tensions, noting that rising bond yields in some countries already reflect market concerns about fiscal sustainability. She urged nations to address fiscal issues and "develop and publish credible plans to ensure debt and deficits remain on a sustainable trajectory." While she did not name specific countries, these remarks come in the wake of a substantial rise in long-term U.S. Treasury yields. Rising bond yields, combined with inflation risks, also constrain the scope for central bank rate cuts. Georgieva emphasized that central banks must maintain a "highly focused" approach on price stability targets. Even if restrictive monetary policy may dampen economic growth, monetary policy cannot be significantly relaxed as long as inflation does not persistently decline.
If energy prices surge again, this contradiction could intensify further. Higher oil prices would not only directly push up inflation but could also compel central banks to extend high-rate policies, thereby increasing government debt servicing costs and exerting pressure on investment, consumption, and overall economic activity. Georgieva also noted that countries need to address the "excessive global imbalances" that are aggravating trade tensions. The IMF is refining its models for assessing external imbalances and plans to further study the interplay between macroeconomic trends, trade policies, and industrial policies.
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