Inside the vast, glass-walled Queen Sirikit conference centre in Bangkok, the air-conditioned atmosphere was calm as policymakers from more than 100 countries gathered this week for the International Monetary Fund\u2019s annual meeting \u2013 and contemplated the surprising strength of the global economy.<\/p>\n
A small army of smiling, uniformed Thai staff were on hand to explain the baffling geography of the heavily guarded building, where lunch options were as cosmopolitan as the delegates \u2013 including, improbably, a Burger King.<\/p>\n
\u201cResilience\u201d was the buzzword at one event after another, after six months in which sky-high oil prices and geopolitical chaos have made less of a dent in the global economy than first feared.<\/p>\n
Growth has not fallen off a cliff, buoyed up by the AI investment boom; stock markets haven\u2019t crashed. \u201cWe had Covid, the war in Ukraine, supply-chain shocks, the war in Iran, and the alarm bells go off. And yet we haven\u2019t had that massive synchronised crisis. So I think there\u2019s this feeling that a lot of countries are sort of defying gravity at all income levels,\u201d said Clemence Landers, the vice-president of the Washington-based Center for Global Development.<\/p>\n
Yet the IMF was also keen to remind delegates that the resilience of the past six months had been bought at a cost and may not last. The message \u2013 \u201cResilience under strain, urgent choices\u201d \u2013 leapt out from the front page of its flagship publication, the World Economic Outlook (WEO).<\/p>\n
According to IMF experts, the cost of the energy support measures governments have put in place to protect their citizens from soaring oil prices, as a result of Donald Trump\u2019s war in Iran, has been an extraordinary 0.5% of global GDP.<\/p>\n
It said many countries would be unable to sustain support on this scale for much longer \u2013 and some had already begun to phase out subsidies, exposing the public to more of the costs of the conflict.<\/p>\n
The IMF urged governments to limit the costs and let market signals do their work, by sticking to temporary, targeted measures, rather than across-the-board subsidies.<\/p>\n
People take part in a protest against the International Monetary Fund and World Bank Group in Bangkok on Friday. Photograph: Anthony Wallace\/AFP\/Getty Images<\/p>\n
Aside from how to cope with the practicalities of a conflict that has persisted far longer than many governments had hoped \u2013 and whose end point remains elusive \u2013 the IMF was also keen to highlight two pressing risks.<\/p>\n
The first was what it sees as the unsustainable state of the public finances, particularly in the world\u2019s richest countries. The WEO projected the highest budget deficits this year for advanced economies since the depths of the Covid pandemic.<\/p>\n
That means government debt in these countries is expected to keep rising \u2013 from 108% of GDP last year, to 115% of GDP in five years\u2019 time.<\/p>\n
\u201cPublic debt is high in many economies, and fiscal buffers that could otherwise have helped meet rising spending pressures from ageing populations, climate change and national security needs have instead been used to absorb the repeated shocks,\u201d the WEO said.<\/p>\n
Anxiety about spendthrift governments appears to have been one factor driving the recent sell-off of government bonds \u2013 pushing up yields, or interest rates, to their highest levels in decades; though it also reflects higher expectations for inflation and growth.<\/p>\n
The IMF\u2019s managing director, Kristalina Georgieva<\/a>, lamented: \u201cToo many countries, they did not use the post-pandemic recovery to rebuild fiscal buffers, and each new shock has pushed debt levels higher.\u201d<\/p>\n Fretting that this leaves governments exposed when the next shock comes, as well as pushing up the share of tax revenues required just to service debt, Georgieva repeatedly implored governments \u2013 not least Washington \u2013 to tighten their belts. \u201cWhat is our loudest call to policymakers right now? Make urgent repairs to the fiscal house before the cracks widen,\u201d she said. It seems a message unlikely to land well with voters buffeted by one shock after another.<\/p>\n