The World Bank and International Monetary Fund (IMF) Annual Meetings open on the 12th in Bangkok, Thailand. The gatherings take place as the Middle East war enters its eighth month, with the Strait of Hormuz blockade disrupting energy supply, interest rates rising, and public debt swelling to its highest level since World War II—all compounding downward pressure on an already sluggish global economy. The meetings run through the 18th, with G20 and G7 finance ministers' and central bank governors' meetings also scheduled during the period.

This marks the first time in three years that the Annual Meetings are being held outside Washington. The biggest focus is the impact of losing roughly 20% of global oil supply amid the prolonged war with Iran. Diesel and fertilizer prices have climbed, intensifying inflationary pressure. World Bank President Ajay Banga told Reuters that while conditions have avoided the worst-case deterioration feared immediately after the Strait of Hormuz closure, downward pressure is once again building.

Banga expressed the view that the El Niño phenomenon, combined with fertilizer prices, energy costs, and debt problems hitting simultaneously, poses a risk to the global economy, and said greater caution is needed in preparation for the coming months. IMF Managing Director Kristalina Georgieva also warned in a speech ahead of the meetings that "winter is coming," cautioning against optimism.

Emergency Reserve Release and Temporary Sanctions Relief on Russia

In response to the tightening energy market, the G7 agreed to release a combined 100 million barrels of diesel and crude oil from emergency reserves. U.S. President Donald Trump announced on the 10th that an agreement had been reached to receive diesel supplies from Russia, signaling a temporary exemption from sanctions against Russia. The move aims to curb gasoline prices ahead of November's midterm elections, but Ukrainian President Volodymyr Zelenskyy has strongly objected to the decision.

Since the war began on February 28, more than 1 billion barrels of oil have been released into the market, primarily from private inventories. However, according to industry executives, inventories available for supply to the global market have been declining, increasing the market's vulnerability to price spikes. The lack of spare capacity is weakening resilience to new geopolitical risks.

The IMF is not expected to significantly revise its outlook for global economic growth of around 3% in 2026, but downward revisions are anticipated for Ukraine and Gulf states whose energy exports have fallen sharply following Iranian attacks. Research published by the IMF this week showed that sharp spikes in food and energy prices are increasingly becoming a source of crises that prolong inflation expectations, worsen poverty, and threaten economic stability.

Debt Problems as a Structural Risk

Another major concern is the growth of public debt. According to the IMF, global public debt stands at its highest level since World War II and is projected to exceed 100% of global gross domestic product (GDP) by 2030.

While advanced economies—led by the United States—carry high debt-to-GDP ratios, emerging markets and low-income countries face a more severe situation. Capital outflows accompanying rising U.S. interest rates, the El Niño phenomenon, and underinvestment in artificial intelligence (AI)—where AI investment in advanced economies has helped mitigate supply shocks but developing countries have not benefited—are compounding headwinds.

In developing countries, interest payments already exceed an average of 10% of government revenue, forcing them to refinance debt at higher rates. During the COVID-19 pandemic, the G20 moved to suspend debt repayments for the poorest countries, but there is little momentum for similar measures this time. According to diplomatic sources from G20 member countries, high debt levels and political pressure pose greater obstacles than before.

Furthermore, many low-income countries are growing wary of the IMF's new policy direction of demanding deeper reforms in exchange for fewer lending programs. Iolanda Fresnillo, who handles debt justice at the European NGO Eurodad, pointed out that countries are already being forced into spending cuts by rising debt repayments and IMF lending conditions, and expressed the view that a review of conditional lending policies could further worsen the situation.

Citing the example of Kenya, Fresnillo explained that the country's attempts to cut public spending and raise taxes to avoid debt restructuring triggered large-scale protests, particularly among young people. She also said the IMF risks losing credibility if it fails to recognize the severity of the crisis facing developing countries.

The Convergence of Security and International Finance

Josh Lipsky, who oversees the international economics division at the Atlantic Council, a U.S. think tank, notes that the link between security and international finance has grown even stronger. The previous Annual Meetings held outside Washington took place in Morocco three years ago, immediately after Hamas's attack on Israel. At the time, many finance officials dismissed the attack as not an economic issue, but it set off a chain reaction leading to the war in Gaza and now the war with Iran and the Strait of Hormuz blockade.

Lipsky said that as geopolitical crises rapidly ripple through the global economy, policymakers "must recognize that this is no longer the same world as before," emphasizing the need for more agile responses in an increasingly interconnected world.

Meanwhile, U.S. Treasury Secretary Scott Bessent, whose country holds this year's G20 presidency, will be absent from both the Annual Meetings and the G20 gathering due to domestic obligations, dispatching two senior Treasury officials in his place. With tensions rising among nations over the Ukraine war and U.S. sanctions on the International Criminal Court (ICC), the absence of the host country's top official at a gathering of major economies' finance chiefs could draw dissatisfaction from other countries.