IMF spokesperson Julie Kozack said the global economy remained on a 3% growth path, but risks to the economic outlook remained high. Kozack said the disinflation process that began after the 2022 cost-of-living crisis had stalled somewhat and called on central banks to remain committed to their price stability targets.
Kozack said the global economy had shown resilience despite the six-month war in the Middle East, adding that the impact of various shocks, including the energy shock, had been more limited than expected.
Energy and artificial intelligence shape the growth outlook
Kozack said the global economy was being affected by the contrasting forces of an energy-driven supply shock and an artificial intelligence-led demand shock. She said the energy shock had not yet ended and noted that oil and natural gas prices remained high.
Kozack said these developments were affecting economies in different ways and that risks to the economic outlook remained high. She added that global growth remained on a 3% path.
Public debt approaches 100%
Kozack said the ratio of global public debt to gross domestic product had reached nearly 100%, adding that this was the highest level seen since the Second World War. She said public debt was expected to rise further worldwide.
Kozack also recalled that the July update to the World Economic Outlook had raised the global inflation forecast for 2026 to 4.7%. She said inflation expectations had risen this year, while long-term expectations remained anchored.
U.S. Treasury yields raise global borrowing costs
Kozack said 10-year government bond yields in key advanced economies such as the United States, France and Japan had risen to levels not seen for a long time. She said rising borrowing costs in advanced economies were affecting nearly all countries.
Kozack said many emerging-market economies had strengthened their policy frameworks and taken steps toward independent central banking. She noted that high benchmark yields were offsetting the decline in risk premiums and said policymakers needed to be both agile and credible in this environment.
Advice to central banks on price stability
Kozack said central banks should remain focused on their price stability targets. She also advised fiscal authorities to prepare credible medium-term fiscal consolidation plans.
Kozack stressed the importance of a clear plan and strategy for reducing budget deficits and debt, and said they also recommended measures to revive growth.
Artificial intelligence and China-U.S. relations
Kozack said they were monitoring the secondary sanctions imposed by the United States on Iran under the "Economic Exclusion Operation" and added that the issue would be addressed in greater detail in the World Economic Outlook report and the regional assessment of the Middle East.
Kozack said artificial intelligence could contribute to growth in the short term through a positive demand shock. She said the central question in the medium term was whether the technology would generate productivity gains and lasting growth momentum. She added that the effects of artificial intelligence on growth, labor markets and employment were on the research agenda.
Assessing China-U.S. trade relations, Kozack said she welcomed the leaders of the two countries meeting and negotiating ways to resolve tensions. She said continued contact between the two countries and their efforts to find ways to overcome tensions were positive for the global economy.
