IMF chief says global economy caught between oil shock and AI boom

The global economy is caught in a tug-of-war between an energy shock caused by the closure of the Strait of Hormuz and a powerful investment boom in artificial intelligence, International Monetary Fund Managing Director Kristalina Georgieva said as reported by Reuters.

Georgieva said the global economy had weathered the energy shock “better than we feared”, helped by countries drawing on oil and gas reserves, increased supplies from outside the Gulf, lower energy demand and greater renewable energy capacity.

At the same time, AI investment, particularly in the United States, has supported corporate earnings and consumer spending. Georgieva said AI was increasingly becoming a global growth engine as countries expand data centres and related infrastructure.

But she warned that the energy shock was not over. Shrinking oil and gas reserves and the approach of winter in the Northern Hemisphere could put renewed pressure on energy prices.

“This means the energy shock is not over: a renewed rise in oil prices could fuel inflation,” Georgieva said, warning that central banks could be forced to maintain restrictive monetary policies, weighing on economic activity and debt costs.

She said risks to the global outlook remained tilted to the downside, citing rising bond yields, fiscal pressures and stalled progress on inflation. Developing economies also face the risk of falling behind in AI and suffering from disruptions to fuel and other commodity supplies.

The IMF lowered its 2026 global growth forecast to 3% in July and is due to update its outlook in October.