Kristalina Georgieva, managing director of the International Monetary Fund, warned that while the global economy has so far managed to cope with $100 oil prices, this situation may not last. Speaking at Semafor’s Next 3 Billion event in New York, she stated, "Winter is coming," indicating that inflation is likely to continue rising.
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The ongoing war in Iran and the subsequent energy shocks have contributed to heightened inflation globally since February, prompting central banks to raise interest rates. This increase in borrowing costs means the U.S. will spend more on interest for its national debt this year than on military expenses, reducing its capacity to mitigate the economic impacts.
Although advancements in artificial intelligence have accelerated global economic growth, they do not fully offset the effects of disruptions such as the closure of the Strait of Hormuz. Georgieva emphasized the potential for increased public discontent, saying, "We should prepare for people being more unhappy. Maybe on the street."
She noted that the IMF has not yet observed a significant crowding out of government borrowing by the demand for AI-related investments, but cautioned that this could become an issue in the future. Despite significant progress in reducing debt levels and implementing fiscal discipline in many market economies, rising interest rates are undermining these hard-earned gains in emerging markets. Georgieva remarked that emerging economies are unfairly suffering as they bear the consequences of others' financial misconduct.