Will AI drive a global boom or a bust? IMF report warns of economic threats
Artificial intelligence is redrawing the map of global economic winners and losers. But the same technology now lifting parts of the world economy could also threaten it, the International Monetary Fund warned Wednesday.
In its July World Economic Outlook Update, the IMF projected global growth of 3% in 2026 and 3.4% in 2027, a forecast shaped by two opposing forces: the energy shock from the Middle East war and the boost from a technology investment boom led by AI.
“The net effect varies significantly across countries, depending on their exposure to the war and their position in the technology value chain,” Petya Koeva Brooks, deputy director of the IMF’s Research Department, said in opening remarks at the fund’s press briefing.
The report illustrated how AI could be a worldwide growth engine — but also a new fault line — in the months and years ahead.
AI’s global winners
Brooks told reporters Wednesday that the strength of AI investment, and the boost it provided to some economies, was a surprise.
For example, the report found that the top four net exporters of AI-related hardware — Taiwan, South Korea, Thailand, and Malaysia — had higher-than-expected growth in the first quarter. South Korea, despite its heavy reliance on imported energy from the Middle East, posted a growth rate of 7.5%, about four times more than the IMF had projected in April. That increase was driven largely by semiconductor and AI-hardware exports.
The IMF projected a U.S. growth rate of 2.3% in 2026 and 2.2% in 2027, little changed from its April forecast.
“As the IMF highlights, the U.S. economy probably will grow at a relatively healthy pace this year,” said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, “supported by further gains in household spending and strong investment in AI and related sectors.”
But Allen told Straight Arrow: “This will only provide so much comfort with the labor market anemic, hiring weak and wage growth tepid and being eroded in real terms by high inflation.”
For Americans, the IMF forecast means “we’re looking at more of the same,” said Peter Morici, an economics professor at the University of Maryland. “We’re sort of treading water when it comes to living standards right now.”
Could AI expectations crack?
While highlighting the economic gains from advances in AI, the IMF report also warned of a “possible correction in technology-driven expectations.”
To Monica de Bolle, a senior fellow at the Peterson Institute for International Economics and a former IMF economist, that was the most surprising and important signal in the report.
“The only thing that’s new here is the risk of a market correction from AI,” de Bolle told Straight Arrow. “The fund is sufficiently worried about this to actually talk about it, and that is big in itself.”
The IMF did not call AI a possible bubble. International institutions, she said, are careful not to use language that could needlessly set off alarms or become self-fulfilling prophecies.
“The fund will not talk about some economic vulnerabilities outright, for the same reason that the Fed won’t,” she said. “But the very fact that an AI market correction is now driving down their projections suggests to me that internally, within the fund, there is a fear.”
The concern is not only that AI stocks could fall. It is that the AI investment boom has become large enough, and increasingly debt-financed, to matter beyond Wall Street.
“The moment you bring debt and credit markets into the picture, then it begins to look fragile,” de Bolle said. “I won’t call it a red light, but it’s at least a yellow light, and there is a risk of recession and job losses. ”
She suggested that today’s global AI winners could become tomorrow’s AI losers.
“Americans have reason to be more alarmed than others,” she said. ”Because the investment boom is happening here to an extent that is not happening elsewhere.”
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Ella Rae Greene, Editor In Chief
