Washington – In a briefing ahead of next week’s Group of 20 finance ministers meeting in Asheville, North Carolina, International Monetary Fund Managing Director Kristalina Georgieva said the global economy has handled the recent Iran‑related energy shock more effectively than many feared.
Georgieva noted a “tug of war” between the negative impact of reduced Gulf energy supplies and the growth boost from the expanding artificial intelligence investment boom, which is now spreading beyond the United States.
Balancing risks
While she said the overall outlook is more balanced than in April, Georgieva warned that risks remain tilted to the downside. The chief highlighted mounting fiscal pressures in a number of countries, evidenced by rising sovereign bond yields and a slowdown in the disinflation process.
She explained that central banks may need to keep monetary policy tight to rein in inflation, adding that this could further constrain growth.
Factors easing the shock
According to Georgieva, several factors have helped blunt the energy shock caused by the closure of the Strait of Hormuz. These include drawdowns of oil and gas reserves by many nations, increased non‑Gulf energy supplies, lower overall energy demand, growth in renewable‑energy capacity, and a partial shift back to coal power in some regions.
She also emphasized that artificial‑intelligence investment in the United States is sustaining corporate earnings and consumer spending. Other countries are accelerating data‑center construction and expanding AI‑hardware supply chains, which she said further supports the global outlook.
Looking ahead
Georgieva concluded that while the world economy is resisting powerful headwinds from high debt levels, stubborn inflation, and trade tensions, continued vigilance is required. She urged policymakers to address fiscal imbalances and to coordinate efforts that keep inflation under control without stifling the momentum generated by new technology investments.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
