Energy costs keep inflation high
Crude oil is trading at around $100 a barrel. Georgieva said limited refining capacity adds roughly another $100 a barrel to the cost of refined products such as diesel. Shipping risks in the Strait of Hormuz are also disrupting liquefied natural gas (LNG) supplies, leaving Europe and Asia vulnerable as winter approaches. Oil futures suggest prices could remain high through 2027. Georgieva warned that “the problem of high energy prices will likely persist for some time”, even if the conflict ends soon.
Rising global energy costs are the main reason inflation forecasts have gone up. The Organisation for Economic Co-operation and Development’s (OECD) interim outlook, published in late September, forecasts inflation of 4.1% across Group of Twenty (G20) economies this year and 3.6% in 2027. Both figures are higher than its earlier forecasts. The US Federal Reserve, the European Central Bank and the Bank of Japan have all raised interest rates in response. Georgieva said inflation has been above target for five and a half years.
Global debt reaches a new high
The Institute of International Finance (IIF) reported that global debt rose by more than $10 trillion in the first half of 2026, to a record $365.5 trillion. Governments and non-financial companies accounted for most of the rise. Emerging market debt grew by $6.5 trillion to $110.6 trillion, led by China, and these countries face a record $3.5 trillion of debt falling due this year.
Higher interest rates make that debt more expensive to carry. Ten-year government bond yields are at their highest since 2007 in the US, since 2009 in Germany and since 1996 in Japan. The IIF estimates that advanced economies paid more than $3.3 trillion in interest on traded government bonds over the past year, more than the world spent on defence. Georgieva said global public debt is on course to exceed 100% of GDP before 2030, its highest level since the Second World War.
Risks to global financial stability
Global debt concerns are increasingly intersecting with risks from elevated market valuations. The OECD warns that AI companies are relying more heavily on debt and private financing to fund large investments, increasing their exposure to changing investor sentiment. If returns fall short of expectations, falling valuations and tighter financing conditions could amplify losses across financial markets.
Georgieva has also warned that disappointing returns from AI investments could trigger a wider economic shock. These risks emphasise the need for regulators to monitor rising leverage and stretched valuations to safeguard global financial stability.
Economic resilience faces a test
The OECD forecasts growth of 2.9% in 2026 and 3.0% in 2027. It expects the US economy to grow by 2.2% and China’s by 4.5% this year. However, the measures that have helped cushion the energy shock, including releases from strategic oil reserves, are running low.
The IMF will publish its World Economic Outlook and Global Financial Stability Report on 13 October. In July, it forecast 3.0% global growth for this year, assuming oil would average $89 a barrel. With oil near $100, that assumption is out of date, and the revised global economic outlook 2026 figures will show how much damage the IMF now expects. Georgieva’s message to governments was blunt: “We cannot keep delaying necessary policy action.”