IMF says global debt now exceeds post-WWII highs amid ongoing energy crisis

International Monetary Fund Managing Director Kristalina Georgieva has warned that the Iran war continues to deliver a large global economic shock, disrupting energy supplies and pushing up prices worldwide, with effects expected to persist well into 2027. Speaking at the conclusion of the G20 Finance Ministers and Central Bank Governors' Meeting in Asheville, North Carolina, on September 1, Georgieva said the global growth outlook for 2026 had held at around 3 percent but cautioned that risks remain elevated.arise+1

Energy Shock Far From Over

Georgieva said 13 percent of global oil and 20 percent of gas supplies had been blocked since the closure of the Strait of Hormuz, which has been largely shut since the conflict with Iran began in early 2026. While the global economy has absorbed the disruption better than feared — through drawdowns of strategic reserves, new energy sources, and demand management — Georgieva stressed that the crisis is not over.newsonair+2

"The Strait of Hormuz remains largely closed, strategic oil and gas reserves will need restocking, AI drives up energy demand, and in the northern hemisphere winter is coming," she said at the G20 gathering. Even a ceasefire, she cautioned, would not bring immediate relief. The IMF cut its 2026 Middle East growth forecast to just 0.7 percent, down 1.2 percentage points from its April projection.thenationalnews+2

Debt Exceeds Post-War Highs

Georgieva also raised alarms over global public debt, which she said now stands at almost 100 percent of GDP worldwide, exceeding post-World War II levels and set to climb further. According to the IMF's April 2026 Fiscal Monitor, global gross debt reached nearly 94 percent of GDP in 2025 and is projected to hit 100 percent by 2029, a year earlier than previously forecast.sourcedwire+1

"The debt trajectory resembles a staircase: big vertical steps when shocks occur, little or no reduction afterward," Georgieva said. She warned that the disinflation process has stalled in many countries, with mounting fiscal pressures pushing core bond yields upward. She urged governments to produce credible medium-term consolidation plans, saying central banks must stay focused on price stability rather than easing policy to help governments manage debt burdens.arise+1

AI as Double-Edged Sword

Surging artificial intelligence investment — including in power infrastructure — is driving growth in the United States and economies integrated into the AI value chain, such as South Korea, Georgieva noted. But she warned that the future impact of AI on productivity and financial stability "is dogged by unknowns." Separately, in remarks at the Jackson Hole symposium, she cautioned that the stablecoin era leaves policymakers with diminishing room for error, as faster-moving global finance could also mean faster-moving financial shocks.businessamlive+1

"Helping countries create fiscal space to support growth-enhancing spending is even more pressing in the current conjuncture," Georgieva said, calling for collective action on debt restructuring, spillover management, and global imbalances.arise+1