AI Investment Surge Could Spark Global Financial Risks, Warns IMF

WASHINGTON: The International Monetary Fund (IMF) has warned that the artificial intelligence (AI) boom could trigger financial market instability if investment and corporate borrowing outpace actual productivity gains. IMF Managing Director Kristalina Georgieva said AI investment is supporting economic growth, particularly in the United States and Asian technology supply chains. However, she cautioned that rising debt and overly optimistic profit expectations could expose financial markets to risks. According to Georgieva, the share of investment-grade bond issuance accounted for by major technology companies financing AI infrastructure has risen from less than 1 per cent to around 10 per cent in two years. The IMF also flagged the interconnected relationships between technology companies and AI developers. If expected revenues fail to materialise, falling valuations could trigger financial stress across the AI sector and spread to investors and financial institutions worldwide.

Despite these risks, AI could boost global productivity and add around 0.5 percentage points to annual economic growth over the next decade. (IANS)

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