The International Monetary Fund cautioned that governments have increasingly limited room to cushion future shocks amid rising energy prices, an uneven artificial intelligence boom and growing public debt.
In its latest World Economic Outlook, Resilience under Strain, Urgent Choices, released at the IMF-World Bank Annual Meetings in Bangkok on Tuesday, the fund said geopolitical tensions and shrinking fiscal buffers were exposing vulnerabilities even as AI-related investment supported growth.
Silvana Tenreyro, the IMF’s economic counsellor and director of the Research Department, said the global economy had demonstrated resilience despite successive disruptions, but risks remained tilted to the downside. The IMF urged governments to strengthen their capacity to withstand future shocks, as high debt and borrowing costs constrain their ability to respond.
Geopolitical conflict, particularly in the Middle East, threatens oil production, exports and trade. Disruptions to shipping routes through the Red Sea and Suez Canal could further raise energy and transport costs. Alternative supplies, inventory drawdowns, rerouted shipments and improved efficiency have cushioned the impact so far. However, the fund warned that some adjustments were approaching their limits, leaving energy-importing economies particularly vulnerable to prolonged disruptions.
Higher energy prices also complicate monetary policy, forcing central banks to contain inflation without further weakening economic activity. AI-related investment and trade have supported global growth, particularly in Asian economies integrated into technology supply chains. The benefits remain uneven, leaving countries outside the boom more exposed to external shocks.
The investment surge carries risks. If expected productivity gains fail to materialise, falling company valuations could weaken investment, demand and financial stability. China remains a major regional growth driver, with GDP projected to expand by 4.5% in 2026 and 4.0% in 2027. Its technological development offers opportunities for regional integration while intensifying competition in manufacturing and technology industries.
Geopolitical tensions, trade fragmentation and concentrated supply chains could further raise production costs and weaken investment. For Thailand, energy dependence, uneven technological opportunities and limited fiscal flexibility present significant challenges amid modest growth prospects.
The IMF projects Thailand’s GDP to expand by 2.1% in both 2026 and 2027, with inflation forecast at 2.1% this year before easing to 1.7% next year. As a net energy importer, Thailand remains vulnerable to higher oil and commodity prices, which can increase production costs, fuel inflation and weaken purchasing power.
Capturing greater benefits from the AI boom will require deeper integration into regional technology supply chains and translating investment into lasting productivity gains. Higher public debt and borrowing costs could restrict the government’s ability to support economic activity during future crises. Rebuilding fiscal buffers would preserve resources for emergency measures, essential services and development spending while protecting vulnerable households.
The IMF urged governments to strengthen fiscal discipline, safeguard price stability and address structural weaknesses before another major shock. Countries with high debt and persistent deficits should consolidate their finances, while assistance should remain temporary and targeted at vulnerable households. Central banks must contain inflation while recognising the impact of high interest rates on growth, particularly when price pressures stem from supply disruptions.