In a little more than a month, the International Monetary Fund (IMF) and the World Bank will kick off their joint annual meetings in Bangkok.
The gathering comes at a pivotal moment for the global economy, as widening imbalances, trade and investment fragmentation, and geopolitical tensions make international economic coordination increasingly difficult.
Five issues are likely to shape the agenda.
1. Global imbalances are back
Global imbalances have widened sharply in recent years, approaching their highest levels in 150 years and drawing the attention of the G7 at its June summit. According to the IMF’s External Sector Report, published in July 2026, global imbalances—measured as the sum of the absolute values of current account surpluses and deficits—increased from a low of around 2.4 percent of global GDP in 2019 to around 3.6 percent in 2025, reversing much of the decline from their peak of almost 6 percent in 2008.
At the same time, the underlying issue has become harder to resolve as domestic saving and investment patterns are increasingly driven by structural factors, which account for 55 to 60 percent of global imbalances. Policy gaps account for the remainder.
Meanwhile, growing stocks of net international investment positions among surplus and deficit countries mean that primary income flows are playing a larger role in determining current account balances. Finally, bilateral trade imbalances arising from countries’ positions in global value chains can be difficult to unwind once established. Together, these forces make global imbalances harder to tackle.
Imbalances rooted in economic fundamentals need not be problematic when countries cooperate and trust one another. In today’s geopolitical climate, however, they are more likely to fuel economic and political friction. And the IMF has little ability to prevent that outcome. It can identify the domestic distortions driving external imbalances and recommend policy changes, but it cannot compel major economies—including the US, China, and Europe, which together account for one-half to two-thirds of global imbalances—to act on its advice.
2. Geopolitical rivalries are fragmenting trade and investment
Over the past several years, geopolitical rivalry has translated into growing geoeconomic fragmentation, with trade and investment flows growing faster among geopolitically close countries than among distant ones. Specifically, since the Russian invasion of Ukraine, trade between geopolitically distant countries fell by 12 percent relative to trade within geopolitical blocs, and foreign direct investment declined 20 percent.
At the same time, protectionist measures such as tariffs have increased substantially in recent years, reaching more than 2,500 actions in 2025—nearly five times the number recorded in 2015. Geopolitically driven wars, including those in Ukraine and Iran, have also disrupted global supply chains for energy and other commodities. Taken together, these developments could impose substantial costs on the global economy, with the IMF estimating that geoeconomic fragmentation could reduce global GDP by as much as 7 percent.
More fundamentally, fragmentation has exposed a growing disconnect between the IMF’s traditional policy objectives and the priorities of many of its member states. The IMF has continued to emphasize its traditional mandate of promoting balanced and sustainable growth, primarily through productivity and efficiency gains. By contrast, many member states have put greater weight on economic and national security than on efficiency, using industrial policy to strengthen domestic production and reduce strategic dependencies in response to heightened geopolitical tensions. This divergence in priorities risks making it harder for the IMF to build consensus around policies that trade short-term resilience for long-term efficiency.
3. Debt is squeezing public finances
Global public debt has increased to a record $102 trillion, or 91 percent of global GDP—and debt-servicing burdens have also become difficult to reconcile with other pressing needs. Today, more than 3.4 billion people, or 41 percent of the world’s population, live in countries that spend more on interest payments than on education or health care.
The increase in public debt has become increasingly structural, driven by persistently large fiscal deficits—estimated to reach 5 percent of global GDP by the IMF—as well as the legacy of the pandemic and rising government spending on defense, climate change mitigation, and population aging. Meanwhile, public resistance to higher taxation appears to be spreading globally, reflecting declining trust in governments and making it more difficult to raise the revenues needed to contain debt.
As a result, elevated structural public debt is increasingly putting upward pressure on bond yields, posing a major risk to equity markets and economic prospects.
4. From AI to aging, new pressures are building
Record levels of public debt and persistent fiscal deficits leave countries with less room to respond to three major structural challenges: demographic aging, climate change, and the economic and social disruption associated with artificial intelligence (AI).
First, demographic change is reshaping public finances. The world is aging rapidly as fertility rates decline and life expectancy lengthens. From a global perspective, the number of workers paying taxes to support each retiree is expected to fall from six in the 1960s to two in 2035. That shift will place growing pressure on pension systems and public finances, while transferring a larger fiscal burden onto working-age populations and potentially intensifying intergenerational tensions.
Second, the economic costs of climate change are becoming increasingly visible. This year has seen record-breaking heat waves and extreme weather, which have had negative macroeconomic effects. Natural disaster losses totaled $592 billion in 2024 and 2025 combined—and governments face pressure to bolster spending on climate change mitigation and the energy transition, with the Organisation for Economic Co-operation and Development estimating that $5 trillion a year will be needed through 2030.
Third, AI offers both a potential solution and a new source of risk. The AI revolution could significantly improve productivity and potential growth, helping economies cope with some of the pressures created by aging workforces and high debt. But it also raises the prospect of large-scale labor displacement, potentially worsening income and wealth inequality and triggering social and political backlash even if overall prosperity increases.
In the near term, AI could also create financial-stability risks: Fitch has warned of an AI market correction given elevated technology-stock valuations alongside substantial debt accumulation.
5. The development divide is widening
AI has contributed to an increasingly K-shaped pattern of economic growth, intensifying inequality in domestic income and wealth distribution. It is also widening the gap between developed and developing countries, as economies with greater access to AI, capital, and advanced technologies are better positioned to capture its productivity gains.
Making matters worse, official development assistance from developed countries has fallen noticeably in recent years—by almost a third from its 2023 peak to $174.3 billion in 2025, with a further 6.9 percent decline expected this year. Alternative sources of aid have not offset that steep decline. The resulting contraction in external financing is creating a formidable obstacle to development, particularly for low-income countries that have limited domestic resources to compensate.
The IMF and World Bank must navigate a new reality
Confronted with these challenges, the IMF and World Bank face growing constraints on their ability to support developing countries.
Geopolitical rivalry has increased mistrust among their major shareholders, making it difficult to reach consensus on solutions—including efforts to expand their financial resources to meet rising needs.
The challenge for the two institutions is therefore not only to mobilize additional resources. They must also navigate a geopolitical minefield while delivering a focused package of measures to provide practical assistance to low-income countries.
Hung Tran is a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, a senior fellow at the Policy Center for the New South, a former executive managing director at the Institute of International Finance, and a former deputy director at the International Monetary Fund.
Further reading
Thu, Aug 13, 2026
Are rising bond yields and elevated leverage a recipe for market turmoil?
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Rising bond yields, elevated leverage, and an ongoing correction in AI stocks are making the financial system more fragile. The appropriate response is preparation, not panic.
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Tariffs alone won’t fix global imbalances. The G20 should use economic “carrots” to de-risk from China without destabilizing it.
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Image: The IMFC plenary during the IMF-World Bank Spring Meetings in Washington on April 17, 2026. Source: REUTERS/Yuri Gripas/ABACAPRESS.COM.