Why overconfidence in AI could hurt the global economy, IMF explains
The International Monetary Fund (IMF) has warned that growing optimism around artificial intelligence (AI) could pose risks to the global economy if expectations fail to match reality.
IMF chief economist Pierre-Olivier Gourinchas said the rapid rise in AI-driven investment has helped push stock markets to record highs, particularly in the United States. However, he cautioned that a sharp market correction could follow if AI does not deliver the productivity and profit gains investors are expecting.
Such a downturn could spill into the economy if falling markets cause consumers and businesses to cut back on spending, he said.
The IMF estimates that increased investment in AI and technology added about 0.3 percentage points to average annual US economic growth in the first three quarters of 2025. This helped offset the economic impact of a lengthy US government shutdown later in the year.
Gourinchas noted a growing gap between the US, where AI investment is surging, and other advanced economies. The IMF now expects US growth of 2.4 percent this year, while growth in the euro area is forecast at 1.3 percent, with Japan expected to grow more slowly.
China and India are also seeing relatively strong growth compared with other emerging markets, the IMF said, with most of the recent upward revision in global growth driven by the US and China.
This story is written and edited by the Global South World team, you can contact us here.
