IMF Flags Limits to Economic Resilience as Buffers Deplete
IMF managing director says economic resilience is nearing its limits, with energy and fiscal buffers depleted and low-income importers hardest hit.
The story in focus
At the IMF Annual Meeting in Bangkok, Managing Director Kristalina Georgieva said the global economy remains resilient but that this resilience is reaching its limits, with energy and fiscal buffers depleting and inflation stubbornly high in many places.
- Georgieva spoke at the IMF Annual Meeting in Bangkok on Wednesday, October 14.
- She said resilience is reaching its limits as energy and fiscal buffers are depleted.
- The growth outlook is pulled down by an energy supply shock and up by AI demand.
Buffers Eroding as Shocks Repeat
Speaking at the Annual Meeting in Bangkok, the IMF managing director said the global economy has held up against frequent, repetitive shocks and uncertainty but that this resilience is approaching its limits. Energy and fiscal buffers are being depleted, and inflation remains stubbornly high in many places, she said.
She described the growth trajectory as pulled in two opposite directions: downward by a negative energy supply shock triggered by war in the Middle East, and upward by a positive demand shock linked to AI.
Winners, Losers and Fiscal Advice
Economies closely integrated into the AI supply chain, many of them in Asia, are generally doing better, she said, as are energy exporters unaffected by wars. Low-income countries and fragile and conflict-affected states, especially energy importers or those left out of the technology boom, are taking the biggest hit.
Georgieva called on policymakers to make urgent fiscal repairs, enhance revenues, rationalize spending and improve public financial management. As energy and food prices rise, she said governments should protect people rather than prices, and suggested a prudent, hawkish bias may suit many countries.
Which economies did the IMF managing director say are generally doing better?
She said economies closely integrated in the AI supply chain, many of them in Asia, and energy exporters not affected by wars are generally doing better, while low-income and fragile energy importers are hit hardest.
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