Image: from IMF X @IMFNews
By Open Chronicle Staff with Agencies
BANGKOK – International Monetary Fund (IMF) Managing Director Kristalina Georgieva issued a stark warning today, stating that the global economy is once again “being put to the test” as conflict involving the United States, Israel, and Iran threatens to destabilize international markets and energy supplies.
Speaking at a conference in the Thai capital focused on the future of Asia toward 2050, Georgieva emphasized that volatility has shifted from a series of isolated shocks to a persistent state of affairs. “We live in a world where shocks are more frequent and unexpected,” she noted, according to reports from financial news outlet FX Street. “Uncertainty is now the new norm.”
Energy Security and the “Rollercoaster” Market
The primary concern for global policymakers is the escalation of hostilities in the Middle East, which has rapidly spread to affect the Strait of Hormuz and the Persian Gulf. This strategic maritime corridor is a vital artery for global trade, with approximately 20% of the world’s oil and Liquefied Natural Gas (LNG) passing through its waters.
“This conflict, if prolonged, could obviously affect global energy prices, market sentiment, and inflation,” Georgieva warned. She described the financial markets over the past few days as a “rollercoaster,” noting that the current calamity will place significant new demands on global decision-makers.
Asia at the Epicenter
While the conflict is centered in the Middle East, Asia stands as the continent most vulnerable to these disruptions. Data from Kpler and the U.S. Energy Information Administration (EIA) reveal that between 84% and 90% of the crude oil passing through the Strait of Hormuz is destined for Asian markets, particularly China, India, South Korea, and Japan.
Despite these energy risks, Georgieva reminded the audience that Asia remains the powerhouse of the global economy, generating two-thirds of global growth and accounting for 40% of international trade. “It is not possible to talk about the global economic future without mentioning Asia,” she said.
Productivity and AI as a Shield
To maintain leadership in growth amidst such instability, the IMF chief pointed toward increasing productivity through the development of Artificial Intelligence (AI). She lauded Singapore for its high level of readiness in adopting the technology and highlighted China and South Korea as leaders in AI implementation.
While Georgieva expressed hope that the current conflict would end quickly for the sake of the world, she conceded that the global community is likely entering a “prolonged period of instability.”