Kristalina Georgieva says oil reserves, non-Gulf supply and weaker demand softened the Iran war’s impact, but inflation and bond yields remain risks
The global economy has shown unexpected resilience to the energy shock caused by the Iran war, aided by the release of reserves, diversified energy supplies, and lower demand.
The IMF warns that rising public debt, persistent inflation, and higher bond yields remain serious risks to the global economic outlook.
Governments are urged to address fiscal weaknesses and create sustainable debt plans, as central banks may need to keep monetary policy restrictive to control inflation.
The global economy has absorbed the energy shock caused by the Iran war better than expected, but rising public debt, persistent inflation and higher bond yields remain serious risks, International Monetary Fund Managing Director Kristalina Georgieva said.
Speaking ahead of next week’s meeting of Group of 20 finance ministers and central bank governors in Asheville, North Carolina, Georgieva said the economy was being pulled between disrupted energy supplies from the Gulf and growth generated by artificial-intelligence investment.
AI investment, previously concentrated in the United States, is now spreading to other economies through data-centre construction and increased production of related hardware.
Georgieva said risks to the global economic outlook were more balanced than in April but remained tilted to the downside. Fiscal pressures are increasing, while central banks may have to keep monetary policy restrictive for longer to contain inflation.
“The global economy continues to withstand the pressures of high debt, persistent inflation and trade tensions,” she said, adding that it had handled the energy disruption caused by the closure of the Strait of Hormuz better than the IMF had feared.
The impact was softened by the release of oil and gas reserves, increased energy supplies from outside the Gulf, lower demand, expanding renewable-energy capacity and the renewed use of coal in some countries.
AI investment supports growth
Georgieva said investment in AI continued to support corporate earnings and consumer spending in the United States.
Other countries are accelerating construction of data centres and expanding production capacity for AI-related hardware, extending the technology sector’s contribution to global growth beyond the US economy.
The IMF issued no new global forecast at the briefing. In July, it lowered its forecast for global economic growth in 2026 to 3.0%, citing downside risks from the Middle East war, trade fragmentation and uncertainty surrounding AI investment.
Its next update is scheduled for mid-October during the annual meetings of the IMF and World Bank in Bangkok.
Georgieva cautioned governments against assuming that the energy crisis had passed.
Brent crude has traded at about US$80–90 a barrel, or roughly 2,600–2,900 baht, since mid-June. That remains below its spring peak of more than US$118, or about 3,800 baht a barrel.
“The energy shock is not over,” she said.
A renewed surge in oil prices could fuel inflation and force central banks to maintain restrictive monetary policies. Higher interest rates would increase debt-servicing costs and weigh on economic activity.
Georgieva called on governments to address their fiscal weaknesses and establish credible plans to place public debt and budget deficits on sustainable paths.
She did not identify individual countries requiring urgent fiscal adjustments. Her warning followed a rise in the yield on 30-year US government bonds to a 19-year high last week.
US Treasury Secretary Scott Bessent subsequently announced that the Treasury would double the size of its programme to buy back longer-term government debt in an effort to contain borrowing costs.
The IMF has repeatedly urged the United States to reduce its widening budget deficit, saying this would also help narrow the country’s trade and current-account imbalances.
Central banks urged to maintain price stability
Georgieva said central banks must continue to give priority to price stability, even though restrictive monetary policy could slow economic growth.
She also called on countries to address what she described as excessive global economic imbalances, which have contributed to rising trade tensions.
Although she did not identify specific countries during the briefing, Georgieva has previously called on China to rebalance its growth model away from reliance on low-priced exports and towards greater domestic consumption.
“More balanced economies would make the global economy stronger and benefit everyone,” she said.
Georgieva acknowledged that achieving this would be more difficult as the global economy and international trade become increasingly divided.
The IMF is updating its models for assessing economic balances between countries. Future reports will expand its analysis of the factors driving those imbalances, including macroeconomic trends, trade policies and industrial policies.
