Why AI is both the hope and the hazard for world leaders, according to IMF chief Georgieva

IMF Managing Director Kristalina Georgieva told an audience in Singapore that AI is becoming a key driver of relative country performance, but that policymakers are dealing with a difficult macro mix. She described global growth as being “tugged in two directions”: a negative energy supply shock from the war in the Gulf and a positive demand shock from the AI investment boom. She argued that the combined effect is “highly uneven across the world”.

On the upside, Georgieva said global AI investment is on track to match or exceed the sums used to build major infrastructure such as railroads, power grids and telecom networks. The article reports her view that AI could add up to about half a percentage point to annual world growth if implemented well, framing the potential as adding an economy-sized boost over a decade. However, she also stressed that the benefits may be highly concentrated and could widen inequality.

Georgieva also argued the AI buildout is inflationary, alongside energy and food shocks, tariffs and defense spending. The article links that inflation concern to bond markets, saying yields in the U.S., Germany and Japan have surged to their highest levels in decades, and that ballooning long-term private bond issuance by AI-related borrowers competes for capital with governments.

Finally, she warned that global public debt is near record post-war levels and is on track to exceed 100% of GDP, with the “easy ride” ending as interest rates rise relative to growth. What to watch next is whether AI-related earnings and financing conditions validate the growth upside, or whether disappointments and heavy borrowing turn into a broader financial shock.