The global economy has demonstrated greater resilience to the energy supply shock triggered by the Iran conflict than initially anticipated, according to International Monetary Fund Managing Director Kristalina Georgieva.
Speaking at a G20 event in Asheville, North Carolina, Georgieva described a "tug of war" between the negative impact of disrupted Gulf energy supplies and the growth benefits of the artificial intelligence investment boom, which is expanding beyond U.S. borders. The IMF noted that the global economy has withstood headwinds including elevated debt levels, persistent inflation, and trade tensions, while successfully navigating the energy disruption caused by the closure of the Strait of Hormuz.
Factors mitigating the energy crisis included global drawdowns of oil and gas reserves, increased non-Gulf energy supplies, reduced energy demand, expanded renewable energy capacity, and temporary shifts back to coal power generation in select regions. The AI investment surge in the U.S. has supported consumer spending and corporate earnings, while countries such as Thailand have accelerated data-center construction and AI hardware production.
Georgieva warned that risks to the global outlook remain tilted to the downside despite a more balanced balance of risks compared to April. Rising bond yields and stalled disinflation progress were highlighted as growing fiscal pressures. Central banks were cautioned that a renewed surge in oil prices could reignite inflation, potentially forcing a prolonged restrictive policy stance and requiring heightened focus on price stability.
The IMF emphasized the need for all countries to address fiscal vulnerabilities by presenting credible plans to place debt and deficits on sustainable trajectories. The rapid advancement of AI was noted to pose financial stability risks, while low-income countries risk falling further behind in the technological transition.
