AI Boom Cushions Global Economy, But Risks Loom for Bursa

Quick Answer: Spending on data centres and microchips has cushioned the global economy from higher energy prices caused by war in the Middle East, according to the International Monetary Fund (IMF). Global trade rose 8.3% between 2023 and 2025, but would have been closer to 4.6% without AI-related products. For shareholders, a drop in AI investment could cut global GDP by 0.4% by 2028 and trigger a market correction.

AI spending is holding up the global economy. The IMF said in a report on Tuesday that the boost is large, but the risks are rising with it.

How Much Has AI Lifted the Global Economy?

Leaders weigh ‘huge benefit’, risks of AI for global economy — Leaders weigh the huge benefit and risks of AI for the global economy

IMF chief economist Silvana Tenreyro said global trade rose 8.3% between 2023 and 2025. Without AI-related products, that figure would be closer to 4.6%.

Tiff Macklem, governor of the Bank of Canada, said AI is “everywhere in the global economy”. He pointed to GDP, the stock market and the bond market, adding: “it’s just the beginning.”

AI Boom Cushions Global Economy, But Risks Loom for Bursa — Photo: Free Malaysia Today

Why Are Central Bankers Warning About a Bumpy AI Path?

Federal Reserve chair Kevin Warsh called AI the “most consequential change” to the global economy in his lifetime. He said it has “a huge benefit”, but warned the road ahead would be “very bumpy”.

Warsh cited gaps in understanding the technology and uncertainty over its future market structure. Officials gathered in Bangkok this week also cautioned against relying too heavily on AI investment.

IMF chief Kristalina Georgieva told AFP that any slowdown in the industry “would be felt across the world”. She warned: “If there is loss of confidence and money runs away from AI, that can lead to financial stability risks.”

How Big a Hit Would an AI Investment Slowdown Be?

An IMF report projected that a decline in AI investment could reduce global GDP by 0.4% by 2028. The report said “weaker or less durable AI investments and profitability could be a shock that triggers a market correction.”

Can a Middle East War Puncture the AI Boom?

Moody’s Analytics economists warned that if the conflict drags on, it could “puncture” the boom. Higher energy prices and tighter financial conditions could push up operating costs and interest rates.

Moody’s also flagged doubts over “the long-term profitability and viability of AI business models”. The group said: “A drawn-out conflict would put serious strain on the economics behind AI investment.”

How Could AI Regulation Affect Investment?

US President Donald Trump has urged more limited government regulation, while some in the industry have called for legislation to mitigate risks. Georgieva linked such regulation to future investment in Bangkok on Friday.

She said: “If there are no safeguards, then the risks may exceed the opportunities.”

Which AI Risks Should Bursa Malaysia Investors Monitor?

The FMT report does not name any Bursa Malaysia-listed company, so this article does not single out stocks. Instead, four variables are worth monitoring: AI investment levels, energy prices, interest rates and regulation.

The IMF and Moody’s Analytics both link these factors to AI profitability and investment. Readers who already hold AI-linked names can use this AI Stock Analysis for Malaysians guide as a starting point.

Disclaimer: This article is for general information only and is not financial advice. Share prices can rise or fall. Always do your own research before making any investment decision.

Key Takeaways

Global trade rose 8.3% between 2023 and 2025, versus about 4.6% without AI-related products.
A fall in AI investment could cut global GDP by 0.4% by 2028, according to the IMF.
Moody’s Analytics warns a drawn-out Middle East conflict could strain the economics of AI investment.
Georgieva said “If there are no safeguards, then the risks may exceed the opportunities.”

Frequently Asked Questions

How much did AI add to global trade growth?

IMF chief economist Silvana Tenreyro said global trade rose 8.3% between 2023 and 2025. That figure would have been closer to 4.6% without AI-related products.

How much could a drop in AI investment cut global GDP?

An IMF report projected that a decline in AI investment could reduce global GDP by 0.4% by 2028. The report warned that weaker AI investment could trigger a market correction.

What did Moody’s Analytics say about the Middle East war and AI?

Moody’s Analytics warned that a drawn-out conflict could “puncture” the AI boom. Higher energy prices and tighter financial conditions could raise operating costs and interest rates.

Why does the Fed chair call the AI road bumpy?

Federal Reserve chair Kevin Warsh said the path is likely to be “very bumpy” because the technology and its market structure are not yet fully understood. He still called AI a “huge benefit”.

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