The brave new world of artificial intelligence (AI) is going to be a mixed and divisive blessing for governments – not least those of key Asian countries – as well as for financial markets.
The AI revolution points to higher economic growth for economies linked to the tech supply chain, with others being left behind. It also signals the potential for financial crises. Balancing these risks will be tricky. The relative optimism, displayed in a recent report from the International Monetary Fund (IMF), may turn out to be misplaced.
Certain economies in Asia and beyond that are doing well happen to be tied to the AI investment boom and the demand it is creating for infrastructure and hardware.
AI hysteria is manifesting not just in stock price bubbles but in real world investment bubbles too. Where goes the latter, the former goes, too.
This dilemma is illustrated by a World Economic Outlook report from the International Monetary Fund (IMF) published on July 8, which offers some pleasant surprises regarding recent global growth while also raising alerts on other fronts.
Global growth, the IMF projects, is likely to be 3 per cent in 2026 and 3.4 per cent in 2027, down from the average of 3.5 per cent observed in 2024-25, and broadly unchanged compared with the fund’s forecasts in April.
