The global economy has weathered the energy shock caused by shipping disruptions in the Strait of Hormuz better than feared, though the crisis is not yet over, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said, Reuters reported.
"Thus far, it (global economy) has weathered the energy shock caused by the closure of the Strait of Hormuz better than we feared, thanks to a combination of factors," Kristalina Georgieva said.
Among those factors Georgieva mentioned:
- drawdowns of oil and gas reserves by many countries,
- increases non-Gulf energy supplies,
- lower energy demand,
- increased renewable energy capacity,
- a return to coal power generation in some places.
She also cited investments in the U.S. and other countries in projects related to artificial intelligence, which supports corporate turnover and consumer demand. Georgieva warned against complacency, noting that oil prices have remained elevated since mid-June, albeit well below the highs seen at the peak of the crisis in the spring.
"The energy shock is not over. A renewed rise in oil prices could fuel inflation, forcing central banks to retain a restrictive policy stance with knock-on implications on debt service costs and on economic activity," Kristalina Georgieva said.
