WASHINGTON: As the global economy faces mounting pressures, International Monetary Fund (IMF) managing director Kristalina Georgieva has urged governments to address fiscal challenges and central bankers to stay committed to lowering inflation.
“All countries need to tackle their rising fiscal problems and formulate and present credible plans to ensure their debt and deficits are on sustainable path,” Georgieva told reporters in Washington.
“Central banks must be laser focused on their price stability mandates,” she added.
“The world economy has so far been resilient in the face of inflation and trade tensions, thanks in part to high investments in artificial intelligence (AI).
“But uncertainty about the outlook remains high, as evidenced by rising bond yields and the lack of progress on bringing down inflation,” she added.
The energy shock stemming from the war in Iran isn’t over, Georgieva also said.
“In short, we have literally a tug of war between the negative supply shock from the Middle East and the positive demand shock from AI.” The IMF will hold its annual meetings in Bangkok in October, when the lender is expected to release its latest assessment of the global economy.
Back in July, the fund left its growth projection mostly unchanged at 3% in 2026, but increased its forecast for global consumer prices, due to energy and food costs.
Georgieva cited shrinking oil and gas reserves as the Northern hemisphere heads into the winter, a harsh El Nino weather pattern that would increase food insecurity and impact of AI on financial stability. — Bloomberg
