IMF Chief Says Oil, Debt Risks Persist as Inflation Could Reaccelerate
Summary
- The IMF said the global economy has weathered the energy shock from Iran, but risks from higher oil prices and rising debt remain.
- Georgieva said another rise in oil prices could intensify inflation pressures and prolong restrictive monetary policy.
- The IMF identified higher government bond yields, rising sovereign debt, and stalled disinflation as key risks, and called for steps to shore up fiscal soundness.
The International Monetary Fund said the global economy has weathered the energy shock stemming from Iran better than expected, though risks from higher oil prices and rising debt remain. A renewed rise in crude prices could stoke inflation and force central banks to keep monetary policy restrictive for longer.
Walter Bloomberg reported on August 25 that IMF Managing Director Kristalina Georgieva said increased investment in artificial intelligence and growth in energy supplies outside the Gulf region helped ease the global economy's burden from the Iran-driven energy shock.
Georgieva said inflation pressures could intensify if oil prices climb again. That could prompt central banks to maintain restrictive monetary policy longer than expected.
The IMF also cited higher government bond yields, rising sovereign debt and stalled disinflation as major risks to the global economy. It urged governments to establish fiscal plans that can secure confidence in public finances.
JH Kim
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