The latest meetings of the International Monetary Fund (IMF) and the World Bank at Bangkok had little to offer lasting solutions to the developing economies facing multifarious challenges, as geopolitical conflicts, rising debt costs and uncertainty surrounding artificial intelligence (AI) tends to threaten global growth.
The economic pressure mounting on developing economies are linked to conflicts in the Middle East and Ukraine, higher borrowing costs, rising inflation and the fear of falling behind in the AI-driven economic transformation.
Perhaps, global lenders policy advice remained largely familiar: reduce fiscal deficits, implement structural reforms and attract more private investment.
IMF Managing Director Kristalina Georgieva emphasised on the fiscal imbalances of developed economies, and argued that even though developing countries' debt levels had declined in recent years, but their borrowing costs had increased as bond yields rose elsewhere.
According to Georgieva, in developing economies over the past decade, average debt-service payments have doubled, and thus less funds remain available for essential public services, including education and healthcare. It leaves governments with less room to invest in infrastructure, social protection and economic development.
The discussions also highlighted the unequal effects of global financial conditions. While advanced economies can have greater access to capital markets, higher global borrowing costs can make financing significantly more expensive for countries with limited fiscal space.
Artificial intelligence emerged as another major source of uncertainty during the meetings, with policymakers struggling to assess its potential impact on productivity, employment, investment and inequality.
Speaking at a panel, Georgieva warned against claims that the economic consequences of AI could already be predicted with certainty.
“We are in a place where we have many more questions than we have answers. And my alert to everybody is: Do not fall for the guys that pretend they have the answers. They are tricking you,” she said.
Developing economies face their own challenges with respect to AI, may risks missing out on productivity gains, because of lack of infrastructure, investment, institutional capacity and skilled manpower. AI boom has led to excessive investment driven by unrealistic expectations, and uncertainty attached to returns on investment.
Josh Lipsky, vice president of international economics at the Atlantic Council, held that the meetings had missed an opportunity to provide clearer guidance or assistance to developing countries.
He argued that advanced economies' own fiscal difficulties and political priorities were making it harder to focus on development challenges, including declining support for international aid.
Colombia's former finance minister Mauricio Cardenas, questioned were IMF and World Bank adequately prepared for the emerging economic landscape. He said policymakers recognised the scale of the uncertainty but lacked specific advice on how governments should prepare for developments whose consequences remain difficult to predict.
During IMF steering committee meeting, when Russia's finance minister spoke, highlighting the continuing diplomatic tensions following Russia's invasion of Ukraine in 2022, nearly half the delegates reportedly walked out.
Security concerns linked to the Middle East conflict also disrupted travel, with Houthi attacks on Riyadh airport delaying the arrival of Saudi Finance Minister Mohammed Al-Jadaan, who had to travel overland to Qatar to catch a flight.
These incidents illustrated how geopolitical rivalries and security risks can complicate the international cooperation needed to address economic instability.
Bangkok also offered a reminder of the physical vulnerabilities facing developing economies. Thailand was still dealing with the effects of September floods that caused nearly $200 million in damage to its industrial sector.
The meetings also debated whether conventional economic reform policies adequately account for inequality and poverty.
Kate Pickett, a professor at the University of York, argued that policymakers should prioritise inclusive growth rather than focusing exclusively on structural reforms.
“If inequality increases, if poverty deepens, that will increase their costs in the long term,” she said.
She cautioned that describing an economy as resilient could conceal the unequal distribution of economic security and opportunity.
Ayhan Kose, the World Bank's deputy chief economist, said the global economy had weathered the energy shock associated with the US-Israeli war on Iran better than initially expected. However, he warned that the outlook for both advanced and developing economies had deteriorated.
Growth had slowed significantly across developing economies, from 4.4% to around 3.6%, according to the figures cited by Kose. He also said growth had weakened in half of advanced economies.
“People are really worried because resilience today is not a guarantee for resilience tomorrow,” he said, pointing to the frequency of successive economic shocks.
Although a global recession had been avoided, the slowdown underscored the limits of judging economic stability solely by whether a crisis had been averted.
The World Bank said it remained focused on helping developing countries prepare for advances in AI, partly by mobilising private capital. The institution's mobilisation of private capital had reached three times its 2022 level, Kose said.
As official development assistance declines, attracting foreign investment remains difficult for many developing economies.
Private capital can help finance infrastructure, technology and productive industries, but investment decisions are often shaped by perceived risks and expected returns. Countries with weaker infrastructure, high borrowing costs or political instability may struggle to attract sufficient funding.
The discussions therefore left developing countries facing a difficult combination of rising financing needs, limited public resources and uncertainty about the next global economic shock.
The central challenge for the IMF and World Bank is not simply to encourage fiscal discipline and private investment, but to provide practical support that helps vulnerable economies manage debt, build technological capacity and sustain inclusive growth in an increasingly unpredictable global environment.