Energy shock adds to inflation pressures
The AI boom is also increasing demand for electricity and other energy resources at a time when global fuel supplies remain under pressure.
Georgieva said crude oil prices remained around US$100 a barrel, while constraints on global refining capacity had added roughly another US$100 a barrel in refining margins for important products including diesel, pushing some refined fuel prices to record levels.
Liquefied natural gas supplies have also been disrupted by risks to shipping through the Strait of Hormuz, with Asia and Europe particularly exposed.
Food, fertiliser and industrial input costs are also under pressure, while adverse weather poses an additional threat to food security.
With the Northern Hemisphere heading towards its colder months and countries expected to rebuild energy stocks, Georgieva borrowed a line from Game of Thrones: “Winter is coming.”
She warned that high energy prices could persist even if the Gulf conflict eased, with oil futures pointing to elevated prices through 2027.
Global public debt heads above 100% of GDP
Higher energy costs are feeding into inflation, policy interest rates and government borrowing costs.
Georgieva noted that 10-year sovereign bond yields in the United States, Germany and Japan had risen to their highest levels since 2007, 2009 and 1996, respectively.
Meanwhile, global public debt is approaching levels not seen since the aftermath of the Second World War and is projected to exceed 100% of global GDP before 2030.
Advanced economies carry some of the largest debt burdens, while emerging markets and low-income countries face their own difficulties as borrowing costs rise relative to revenue and economic growth.
Georgieva warned that governments could no longer rely solely on faster economic growth to bring debt ratios down, particularly after years in which interest rates were generally lower than economic growth rates.
She called for credible medium-term fiscal consolidation, particularly in highly indebted advanced economies, while stressing that governments should explain why fiscal adjustment is necessary, minimise damage to future growth and protect vulnerable groups.
Her message to policymakers gathering in Bangkok was clear: “We cannot keep delaying necessary policy action — you have the tools, now have the wisdom to use them.”
IMF urges ‘prudently hawkish’ monetary stance
Georgieva also said many central banks may need to maintain a “prudently hawkish bias”, with inflationary pressures coming not only from energy and food but also from the AI investment boom, tariffs, defence spending and high public debt.
She described recent rate increases by the US Federal Reserve, European Central Bank and Bank of Japan as appropriate responses to persistent inflation risks.
At the same time, she warned that financial regulators need to closely monitor the AI-driven market boom, as high valuations and growing leverage could amplify any disappointment in technology-company earnings.
Structural reforms needed alongside fiscal repair
Georgieva said fiscal restraint and monetary policy alone would not be enough to address the world’s longer-term economic challenges.
Governments should also pursue reforms aimed at improving workforce skills, increasing labour-market flexibility, making it easier for businesses to enter and leave markets, expanding access to long-term capital, strengthening energy security and reducing unnecessary bureaucracy and outdated regulation.
International cooperation will also be essential if the benefits of AI are to spread beyond the economies currently leading the technology boom.
“In our interconnected world, countries cooperate not out of charity but out of self-interest,” Georgieva said.
The issues raised in Singapore are expected to form part of the wider debate when policymakers from the IMF’s member countries gather in Bangkok next week to discuss the global outlook, financial stability and policies for sustaining growth amid rising geopolitical, technological and fiscal pressures.