IMF-World Bank meetings kick off in Thailand with energy shock, AI on agenda

The International Monetary Fund, or IMF, supports global monetary and financial stability. It advises governments, monitors economies and can provide financial assistance during crises. The World Bank focuses on long-term development and reducing poverty through financing and policy support. Together, they influence how countries respond to economic stress.

Their annual meetings gather finance ministers, central bankers and other officials. In Bangkok, the schedule includes closed-door discussions, public events and policy announcements. The meetings give policymakers a place to debate inflation, debt, energy prices, climate risks and artificial intelligence.

This year, the stakes are especially high. The IMF is urging governments to control spending, while poorer countries are asking lenders for more emergency liquidity and longer-term financing. The meetings will also feature an IMF economic forecast and discussions among G20 finance ministers about rising bond yields.

A negative energy-supply shock happens when war or other disruption reduces available oil and gas. Prices then rise because countries compete for scarcer energy. The shock hurts households, businesses and governments, especially where energy must be imported. It can also push inflation higher across the economy.

The positive demand shock comes from artificial intelligence. Companies are investing heavily in AI technology, lifting stock markets and supporting economic growth in advanced economies. The IMF says AI investment could eventually exceed spending on railroads, electricity networks or global telecommunications systems.

These forces pull in opposite directions. Higher energy prices reduce purchasing power and increase production costs. AI investment creates new demand and may improve growth, but its benefits are uneven. Developing countries outside AI supply chains may gain little, while energy-importing countries face the sharpest immediate pressure.

The article gives a broad estimate rather than one exact total. UNDP warns that combined shocks could leave millions more people in poverty. Its administrator, Alexander De Croo, says the crisis could throw tens if not hundreds of millions of people back into poverty.

The main pressures are surging oil and food prices, reduced household support and weaker economic conditions. Families that already have little income or savings can quickly lose the ability to afford essentials. Developing countries may struggle to keep supporting households as their own costs rise.

The danger extends beyond temporary hardship. Governments may face an impossible choice between protecting their poorest citizens and preserving long-term development plans. The forecast highlights why emergency liquidity and longer-term financing are central demands at the IMF and World Bank meetings.

Countries that import energy must pay foreign suppliers for the oil and gas they need. When global supplies are curtailed and prices rise, their import bills increase quickly. These countries have less protection from the shock than major energy producers, especially when they already face debt and financing pressures.

The higher costs spread through daily life. Fuel and electricity become more expensive, and transport and production costs rise. Those pressures help drive up food and other prices. Households lose purchasing power, while governments must spend more to protect people from the shock or accept deeper hardship.

The article says developing countries are being forced into an impossible choice. They can cut support for their poorest citizens, or risk their entire development agenda. Critics therefore want lenders to provide emergency liquidity now and longer-term financing that makes growth less vulnerable.

The IMF is urging governments to curb subsidy spending and build fiscal buffers. A fiscal buffer is financial room that governments can use when the next crisis arrives. The Fund argues that countries have faced repeated shocks since the pandemic and need stronger public finances rather than endlessly expanding emergency support.

The problem is that poorer countries are already under severe pressure. They face energy-price spillovers from the US-Iran war, rising interest rates in Western economies and a climate crisis worsened by El Nino. Cutting subsidies or household assistance could expose vulnerable people to unaffordable food and energy prices.

Critics say the IMF and World Bank are not meeting the moment. Kevin P. Gallagher calls for short-term emergency liquidity alongside longer-term financing. That approach would help countries protect households while making their future growth paths less exposed to repeated shocks.

Higher energy prices affect far more than fuel bills. Energy is used to transport goods, run factories and provide services. When oil and gas become more expensive, businesses face higher costs. Many pass those costs to customers, so inflation spreads from energy into food and other goods.

The article describes this process in advanced economies. Rising energy prices have fuelled inflation that is beginning to bleed into other products. In response, central banks raise interest rates. More expensive borrowing can discourage households from spending and companies from taking on new investments.

That response taps the brakes on economic activity. It may reduce demand and limit further price increases, but it can also weaken growth. The policy challenge is particularly difficult because governments are confronting inflation while vulnerable citizens need more support, not less.

Inflation means prices are rising across many goods and services over time. When inflation accelerates, the same amount of money buys fewer things. The article links current inflation to surging energy prices, which are feeding into food and other products. This weakens household purchasing power and increases pressure on governments.

Central banks influence the economy through interest rates. When they raise rates, loans and other borrowing become more expensive. Households may delay purchases, while businesses may postpone investment because projects cost more to finance. Savers may also have more incentive to hold money rather than spend it.

Together, these effects reduce demand and slow economic activity. That can ease pressure on prices, though it may also weaken growth. The article says central banks worldwide have raised rates to curb inflation, while policymakers now weigh that response against rising social and climate risks.