IMF Chief Warns Saudi Attacks Could Trigger Economic Fallout Across the World

IMF Chief Warns Saudi Attacks Could Trigger Global Economic Fallout

International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Wednesday that recent attacks on Saudi Arabia could have adverse economic consequences worldwide, as escalating regional tensions add to mounting pressure on the global economy.

Houthi attacks on Riyadh’s international airport over the weekend reportedly killed 13 people and forced flight operations to be suspended. The incident was described as the most serious attack of its kind since 2015.

“ The Saudi economy is important for the region and the world,” Georgieva said during a news conference at the IMF and World Bank’s Annual Meetings in Bangkok.

She cautioned that the consequences of the latest developments could extend far beyond the region, creating potentially negative spillover effects across the world.

IMF Flags Mounting Risks to Global Growth

The warning comes as policymakers and economic experts meet in the Thai capital to assess a range of challenges, including rising energy prices, concerns over the sustainability of the artificial intelligence investment boom and growing public debt.

Bond yields in advanced economies have climbed to multi-decade highs, while persistent inflation has intensified pressure on central banks to consider further interest-rate increases.

Georgieva urged governments to strengthen their public finances before existing vulnerabilities deepen.

“What is our loudest call to policymakers right now? Make urgent repairs to the fiscal house before the cracks widen,” she said.

She called on governments to increase revenue, rationalise expenditure and improve public financial management.

Global Economy Remains Resilient, but Risks Are Growing

In its latest World Economic Outlook, released on Tuesday, the IMF raised its global economic growth projection for 2026 by 0.1 percentage points to 3.1%.

However, the Fund warned that the benefits of increased investment in artificial intelligence were unevenly distributed. Lower-income countries, in particular, continue to face difficulties as energy costs rise and financial pressures intensify.

Georgieva said the global economy had demonstrated resilience despite repeated shocks and persistent uncertainty, but cautioned that its ability to absorb further disruptions was weakening.

She called for greater assistance to low-income countries so they could strengthen their economic foundations and better withstand future crises.

The IMF chief also highlighted the growing burden of debt servicing. According to her, interest payments have risen from approximately 6% of government revenue a decade ago to around 14% today as global interest rates have increased.

The Fund’s Global Policy Agenda, published on Wednesday, similarly warned that debt-servicing pressures had become particularly severe for low-income and vulnerable economies.

IMF Calls for Action on Global Economic Imbalances

Georgieva also renewed the IMF’s warning about widening imbalances in the global economy, arguing that major economies need to adjust their economic policies.

“China needs to spend more, the US has to save more and Europe has to invest more,” she said.

China continues to face weak domestic demand alongside a surge in exports, contributing to large trade surpluses that have become a growing source of friction with its trading partners.

Meanwhile, advanced economies have experienced a sharp rise in debt-to-GDP ratios since the Covid-19 pandemic and the conflicts in Ukraine and the Middle East. Governments have increased spending to cushion the economic impact of these crises.

‘Fundamentals Matter’, Says IMF Chief

Addressing rising government borrowing costs, Georgieva acknowledged that there was no quick or easy solution to the problem.

She said governments would need to pursue fiscal tightening and reduce debt levels to restore stability.

Her message to IMF member countries was clear: stronger economic fundamentals and responsible fiscal management are essential to protecting households and businesses from the consequences of mounting financial pressures.