IMF warns global economy risks recession if oil stays above $100 per barrel

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has issued a stark warning regarding the global economy's vulnerability to geopolitical shocks, particularly those affecting oil prices. She cautioned that if oil remains above $100 per barrel for an extended period, global growth could plummet to 2%, pushing the world to the brink of a technical recession.

This scenario carries significant inflationary risks. The IMF projects global inflation to reach 4.7% this year. Georgieva explained that a resurgence in inflation would likely lead to higher interest rates, increasing the cost of debt servicing and compelling heavily indebted countries to either cut public spending or raise taxes.

Georgieva outlined a global economic landscape increasingly defined by geopolitical fragmentation and burgeoning protectionism. She noted a transition from a predictable world order to a system characterized by multiple power centers and heightened uncertainty. The IMF estimates that increased trade barriers could shrink global GDP by up to 7%.

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The International Monetary Fund (IMF) sees opportunities in Latin America.

Despite these challenges, Georgieva highlighted a "unique opportunity" for Latin America. She urged the region to leverage its potential through greater regional integration and cooperation, advocating for stronger bilateral agreements and bloc-level collaboration, such as Mercosur. She stressed that no single nation can solve the world's major problems alone.

Regarding technology, Georgieva identified Artificial Intelligence (AI) as a powerful driver for global GDP growth, potentially adding 0.8 percentage points annually through productivity gains. However, she also warned of risks, including a widening labor inequality gap affecting 40% of global jobs and threats to financial stability, citing 17 million cyberattacks registered by the IMF during its spring meetings.

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Artificial Intelligence (AI) is a driving force capable of contributing up to 0.8 percentage points to annual global GDP growth, thanks to productivity gains.