International Monetary Fund Managing Director Kristalina Georgieva warned that accelerating artificial intelligence investment and skyrocketing global debt are placing significant pressure on global growth.
She made the statement during an event in Singapore on Wednesday, ahead of the upcoming annual IMF and World Bank meetings.
Georgieva explained that the global economy faces dual pressures from Middle East conflict energy supply disruptions and massive AI infrastructure demand.
"Love it, hate it, or fear it, AI is here," Georgieva said.
Worldwide capital expenditure on AI hardware and technology products currently accounts for over 10 percent of global goods trade, matching historical investments in railroads, power grids, and telecommunications networks.
The IMF projects that successful AI integration could contribute up to 0.5 percentage points to annual global economic growth over the coming decade.
"Going from 3% to 3.5% over a decade — that is like adding an economy the size of ASEAN to the world economy," Georgieva said.
However, economic benefits remain heavily concentrated among nations directly involved in technology supply chains, raising the risk of worsening international economic inequality while fueling ongoing inflationary pressures.
"The AI building boom is inflationary," Georgieva said.
Rising bond yields in major economies alongside elevated public debt levels past 100 percent of global GDP have further limited government capacity to sustain economic expansion without structural fiscal reforms.
"Higher interest rates now put an end to that," Georgieva said.
Financial stability risks also stem from potential shortfalls in tech sector corporate earnings, where heavy borrowing by major technology hyperscalers could trigger broader financial market disruptions.
"Should earnings fall short, however, hyperscaler leverage and large and growing global holdings of U. S.
equities could turn a disappointment into a far-reaching shock," Georgieva said.
Citing historical technology adoption patterns, the IMF head stressed that regulatory oversight remains the primary line of defense against emerging market vulnerabilities during the transition period.
"Somewhere in the transition between today's AI building boom and tomorrow's arrival of AI's benefits that we will traverse the period of maximum risk," Georgieva said.
Policymakers are advised to maintain strict financial oversight and monetary discipline to mitigate potential shocks to global stability.
"Now may be a good time for a prudently hawkish bias in many countries' monetary policy," Georgieva said.
