IMF Chief Says Artificial Intelligence Spending Is Holding Up Global Economy Amid Energy Shocks

BANGKOK — Massive, ongoing global expenditures on artificial intelligence are single-handedly keeping the broader world economy afloat at an estimated growth rate of roughly 3% per year, even as a persistent energy shock weighs heavily on economic activity across most countries.

That assessment was delivered on Monday by International Monetary Fund (IMF) Managing Director Kristalina Georgieva during her opening address at the joint annual meetings of the IMF and the World Bank Group. The high-stakes international summit officially kicked off in the Thai capital of Bangkok and is scheduled to run through October 18, drawing central bankers, finance ministers, and global economic leaders from around the globe.

According to Georgieva, the primary beneficiaries of this unprecedented technological shift are the Asian economies that specialize in manufacturing the essential hardware underpinning the AI boom. In these specialized manufacturing hubs, widespread AI adoption and production are projected to add anywhere from 0.5 to 1 full percentage point to annual economic growth in advanced economies, while contributing an additional 0.2 to 0.8 percentage points to growth across emerging markets.

In economic terms, a single percentage point represents the raw gap between two distinct growth rates. For an economy that would otherwise expand at a modest 2%, gaining a full percentage point elevates its growth trajectory to 3%—a substantial leap on a macroeconomic scale. Georgieva emphasized that the higher end of this projected range would more than sufficiently offset the persistent economic drag caused by aging populations and shrinking labor forces across various regions.

The profound economic impact of this hardware-driven boom was highlighted in the IMF’s July outlook update, which revealed that the top four net exporters of AI hardware—Taiwan, South Korea, Thailand, and Malaysia—drastically outperformed previous expectations. These nations beat their first-quarter growth forecasts by an average of 4.4% on an annualized basis. Most notably, South Korea surged ahead with an annualized growth pace of 7.5%, completely eclipsing the modest 1.8% projection that the Fund had originally published back in April.

Expanding on these figures during a curtain-raiser speech in Singapore last week, Georgieva noted that AI hardware and related technological products now account for more than one-tenth of total global goods trade. Furthermore, she projected that cumulative AI investment as a share of global Gross Domestic Product (GDP) will likely surpass the massive capital outlays historically dedicated to building out the global electricity grid or the transcontinental railroad systems of the past.

Despite these extraordinary gains in specific sectors, Georgieva issued a stark warning that the broader AI boom is largely bypassing the vast majority of countries that exist outside of this specialized supply chain. The Fund’s July update projected overall global economic growth for the year at 3%, a noticeable downward revision from the 3.5% recorded in 2025. This deceleration is largely attributed to ongoing geopolitical conflict in the Middle East, which has driven energy prices upward and imposed an economic tax on energy-importing nations worldwide.

Turning to the labor market, Georgieva characterized the rapid integration of artificial intelligence as a "slow-moving tsunami." The IMF anticipates that AI will eventually touch approximately 40% of all jobs worldwide, fundamentally altering, downgrading, or altogether eliminating many traditional roles. Labor market exposure to AI is estimated to run around 60% in advanced economies, compared to roughly 23% in low-income countries. However, Georgieva pointed out that poorer nations currently score lower on this exposure index primarily because advanced AI infrastructure has yet to fully penetrate their domestic markets.

Young people entering the workforce for the first time are uniquely vulnerable and stand first in line for disruption, she explained, because artificial intelligence is rapidly absorbing the routine, administrative tasks upon which entry-level career paths and professional development are built. Sharing the panel in Bangkok, Singapore President Tharman Shanmugaratnam echoed these concerns, noting that market demand for recent university graduates’ entry-level jobs is already visibly declining. He warned that if governments fail to implement proactive policies, the AI revolution could severely widen the historical wealth gap between rich nations and developing economies.

The rapid rise of artificial intelligence also poses systemic challenges to public finances, according to Georgieva. If the technology successfully shifts a significant portion of national income away from traditional laborers and toward the owners of capital, governments risk losing a major share of the income tax base upon which they heavily rely to fund public services and infrastructure.

Addressing the developmental side of the equation, World Bank President Ajay Banga announced that the institution is actively backing "small AI" initiatives. These targeted tools intentionally bypass heavy reliance on resource-intensive large language models, focusing instead on practical, localized solutions designed specifically to assist farmers, local medical clinics, and classrooms across emerging market economies.

Beyond labor and fiscal concerns, Georgieva cautioned in her Singapore remarks that the massive infrastructure build-out required for AI is actively contributing to inflationary pressures. She also warned that because major technology firms have borrowed heavily to finance their aggressive AI expansion strategies, any future disappointment in corporate earnings could easily trigger broader contagion and spread volatility throughout global financial markets.

The international financial community now awaits the release of the IMF’s comprehensive World Economic Outlook report, scheduled for publication at 9:00 a.m. Bangkok time on October 13—corresponding to 10:00 p.m. Monday in New York. The forthcoming report will provide the Fund’s first formal revision to its global growth forecasts since the July update, offering a clearer picture of how the dual forces of AI spending and energy shocks are steering the world economy.