The International Monetary Fund (IMF) stated that global governments must urgently take measures to address problems caused by the unbalanced boom in artificial intelligence, the protracted energy crisis, and record levels of public debt. These statements were made by IMF Managing Director Kristalina Georgieva while preparing for the annual meetings of economic leaders.
Kristalina Georgieva noted that the rapid development of artificial intelligence stimulates growth, but this growth is currently limited to only a few countries. During her preparatory remarks in Singapore ahead of upcoming meetings in Bangkok, she emphasized that the shortage of key raw materials due to conflicts in the Middle East and Ukraine will persist until 2027.
Furthermore, the sharp rise in bond yields creates serious pressure on the budgets of governments that have accumulated excessive debt. Georgieva called developed economies the 'worst offenders' in this regard. She added that inflationary pressure can stem from both the AI construction boom and shocks in the energy and food sectors, as well as tariffs, defense spending, and high public debt.
The IMF Director urged central banks toward a 'reasonably pessimistic outlook' and warned that countries accustomed to large budget deficits will face a 'very difficult political choice.' Amid these events, a week-long meeting of finance ministers and central bank governors is taking place in Bangkok, against a backdrop of sovereign debt market instability, as yields on US, European, and Japanese bonds have reached multi-year highs.
According to the Institute of International Finance, total global debt has exceeded $365 trillion. Georgieva recalled that the last 17 years offered a relatively easy period for policies, as interest rates remained below GDP growth rates, but higher rates are now putting an end to this.
Conversely, the wave of investments in AI and expectations of the economic growth it will bring continue to support stocks at new highs, ensuring record exports for leading chip and equipment manufacturers in Asia. The decline in bond prices began after the attack by the US and Israel on Iran in February, which led to fuel supply disruptions and increased global prices.
Georgieva reported that the energy shock is currently 'significant but localized.' However, she warned that 'price pressure could intensify as demand grows with the approach of the cold season in the Northern Hemisphere and as reserves are replenished.' She also noted that AI development increases energy consumption and carries the risk of exacerbating economic inequality, as AI-related trade growth reflects investment booms in economies integrated into the value chain but 'largely bypasses most others.'
