International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned that recent attacks on Saudi Arabia could have negative economic repercussions worldwide, given the Kingdom’s importance to the regional and global economies amid energy market disruptions caused by the war in the Middle East.
Speaking at a press conference in Bangkok on the sidelines of the 2026 annual meetings of the IMF and the World Bank Group, Georgieva said Saudi Arabia played a significant economic role regionally and globally, cautioning that recent developments could adversely affect economies around the world.
She highlighted economic and financial reforms implemented by Gulf Cooperation Council (GCC) countries to strengthen their resilience to external shocks by diversifying economic growth sources and building reserves and fiscal buffers to absorb the impact of crises.
Presenting the IMF’s Global Policy Agenda for 2026, Georgieva warned that the global economy’s ability to withstand repeated shocks and uncertainty was approaching its limits, as energy reserves and fiscal buffers were being depleted and inflation remained high in many countries. Some economies, however, were benefiting from increased investment in artificial intelligence (AI).
She said global growth was being shaped by two opposing forces: a negative energy supply shock resulting from the war in the Middle East and a positive demand shock driven by expanding AI investment. Economies more deeply integrated into AI supply chains were performing better than others, she said, noting that many were in Asia, alongside energy-exporting countries unaffected by the conflicts.
Low-income, fragile and conflict-affected economies were bearing the heaviest economic costs, particularly energy-importing countries and those unable to benefit from the technology boom. Georgieva warned that the expansion of AI could widen the economic gap between wealthy and developing countries, amid declining international development aid and rising borrowing, food and energy costs.
Debt-servicing burdens in developing countries had risen on average from six percent to 14 percent of government revenues over the past decade, she noted. She said advanced economies were falling short in addressing fiscal imbalances this time around, urging governments to implement urgent reforms before the imbalances widened further by strengthening revenues, rationalizing expenditure and improving public financial management.
Georgieva also stressed that government assistance should be targeted at people most affected by rising food and energy prices rather than taking the form of broad-based price subsidies. Protecting the most vulnerable while avoiding policies that drain public resources was essential as governments’ capacity to respond to economic shocks diminished, she added.
— KUNA
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