Persistent energy shocks, record public debt and the rapid rise of artificial intelligence defined the agenda at this year’s International Monetary Fund-World Bank annual meetings in Bangkok, Thailand.
Throughout the week, discussions circled around one main challenge: sustaining growth while rebuilding the capacity to withstand future shocks. Across eight events on the sidelines of the official meetings, OMFIF explored what this requires in practice. From southeast Asia’s infrastructure needs to reserve management and digital money, a key topic emerged. Countries need to diversify their sources of growth and security while preserving sovereignty, stability and public trust.
Investing in resilience
One OMFIF roundtable in Bangkok took in account the location of the annual meetings this year and sought to examine southeast Asia in a changing economy. Southeast Asia exemplifies both strong recovery and underlying vulnerabilities. Regional growth has remained resilient despite elevated energy costs, supported by solid economic fundamentals that have endured successive disruptions since the Covid-19 pandemic. However, overlapping supply shocks continue to test this resilience. Rising energy pressures increase production and transport costs, while the impacts of El Niño threatens agricultural output. Higher fertiliser costs and disruptions to rice production can contribute to food inflation, complicating efforts to sustain growth without letting price pressures become entrenched.
The effects of these shocks will differ across economies, making a uniform policy response inappropriate. Scenario analysis is crucial to assess potential consequences for growth and inflation, including impacts extending into 2027. While advance warning gives governments time to prepare, repeated shocks have depleted the fiscal buffers needed for an effective response. Central banks also face challenging transmission conditions. Fiscal dominance can undermine monetary policy, making institutional independence vital when governments’ financing needs compete with price stability.
Rebuilding resilience therefore requires investment that reduces exposure to future disruptions, particularly in energy, climate and digital infrastructure, with regional co-operation offering opportunities to share resources and improve effectiveness. Shared infrastructure can make projects more effective, but mobilising capital requires coordination between governments, development institutions and private investors. A shortage of bankable projects and regulatory obstacles remain key constraints. Connecting institutions with technical expertise to project developers could help turn investment demand into financeable assets.
Energy security illustrates the necessary trade-offs. Diversifying supplies and expanding renewables can reduce dependence on individual sources, but both require significant infrastructure and expenditure. Volatility may persist even after immediate crises subside, demanding careful examination of the commercial case. Public efforts to reduce risk must be matched by private investors willing to assess and assume it. Meanwhile, AI is reshaping investment priorities, drawing attention to technology and changing how capital is allocated across development needs.
Diversifying to sustain resilience
The challenge of reducing dependence while managing costs extends from energy systems to national balance sheets. For reserve managers, diversification increasingly involves consideration of sanctions, political relationships and operational continuity alongside conventional financial risks. Shocks – once seen as remote possibilities – are now frequent concerns. However, abrupt portfolio changes should be avoided. Liquidity remains essential, especially when reserves must be available quickly to meet external obligations or stabilise markets during periods of stress.
These realities limit how quickly portfolios can adjust. Trade relationships may shift faster than financial markets, while foreign exchange liquidity and dollar-denominated public debt continue to shape reserve needs. A seemingly diversified portfolio could still leave a country exposed if its assets do not match its liabilities. Therefore, understanding whether a source of stress is temporary or structural is essential before changing reserve composition.
Greater choice nevertheless offers opportunities to strengthen financial autonomy. Sovereign interest in euro borrowing and engagement with investors across multiple markets can support diversification. Europe’s efforts to integrate savings and investment markets and reduce legal barriers are also significant. Developing local-currency debt markets offers another path to greater financial autonomy. These changes require time and depend on credibility, macroeconomic management and adequate fiscal space. As with energy investment, diversification contributes to sovereignty when it creates reliable options at a manageable cost.
Preserving trust as money evolves
The same balance between greater choice and dependable foundations runs through the debate on digital money. New payment instruments may reduce reliance on costly or fragmented systems, but they also raise questions about who provides the infrastructure and anchors confidence. In a roundtable in collaboration with Giesecke+Devrient, discussions of central bank digital currencies, also described as tokenised central bank money, and private payment instruments centre on where innovation could improve existing arrangements while preserving monetary stability.
Cross-border payments offer a clear opportunity. Limited interoperability, high costs and fragmented infrastructure impede transactions and trade, for example within Africa. Better connections could support the economic relationships on which diversification depends. However, the appropriate approach varies with existing infrastructure. For example, the Bank of Korea has emphasised wholesale applications against a backdrop of already efficient domestic payment infrastructure, while Thailand has pursued regulated experimentation with stablecoins and retail digital money. Across these examples, interoperability with legacy systems matters as much as technological capability. Innovation must provide practical improvements while preserving the central bank’s role in monetary and financial stability.
Digital efficiency also raises questions about dependence and continuity. If connectivity fails, payments systems must still function. Cash consequently remains part of the discussion. Rising cash in circulation alongside declining transactional use underlines the continuing importance of public money as an anchor of confidence and monetary sovereignty. Central banks retain responsibility for contingency planning even as private providers introduce new services. The relationship between public and private money must evolve in ways that preserve this foundation of trust.
These discussions brought the practical choices facing policy-makers back to the broader IMF-WB agenda. Sustaining growth amid high energy costs, record debt and rapid technological change requires countries to rebuild policy space while investing in future capacity. AI, diversified financing and digital money can support that effort, provided policy-makers weigh their benefits against new dependencies and institutional demands. As economies continue to navigate persistent disruptions, regional co-operation, credible public institutions and trusted financial infrastructure can widen policy choices, helping economies withstand the next shock while continuing to grow.
Andrea Correa is Head of Research at OMFIF.
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