IMF chief warns of three major challenges facing global economy

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Kristalina Georgieva urges govts to act on AI

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has said that the global economy faces three major challenges – the rapid growth of artificial intelligence (AI), high energy prices and record public debt – calling for urgent and comprehensive policy measures.

Speaking in Singapore, Georgieva said the effective use of AI could raise annual global economic growth by up to 0.5 percentage points in the long term. However, she stressed that countries needed better digital infrastructure, a skilled workforce and greater international co-operation to ensure that all nations benefited from the technology.

She said global economic growth was under pressure from oil prices of around $100 a barrel, disruptions to liquefied natural gas (LNG) supplies, and rising energy and food costs. Meanwhile, global public debt could soon exceed 100 per cent of gross domestic product (GDP).

Georgieva said high interest rates and rising debt-servicing costs were placing growing pressure on government finances. She called on governments to reduce fiscal deficits, strengthen foreign exchange reserves and adopt credible medium-term fiscal strategies.

She urged the governments to remove unnecessary regulations, improve tax systems, encourage business activity and introduce structural reforms to support economic growth and financial stability.

Economic growth alone would not resolve the debt problem, she said, adding that effective fiscal measures were also necessary.

Georgieva stressed that international co-operation was essential amid continuing global uncertainty. She urged policymakers not to delay necessary action and to make effective use of available resources to support sustainable economic growth and global prosperity.

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