IMF Chief Says AI Is Strengthening Global Economy — But Warns Delayed Productivity Gains Could Trigger Shocks

• Hyperscalers’ share of investment-grade bond issuance has risen more than tenfold over the past two years, according to the IMF.
• A major cyberattack on payment and trading systems, or on access to deposits, could cause immediate losses and undermine confidence, according to Georgieva.
• U.S. Treasury Undersecretary Erin Browne argued the IMF should give greater weight to AI’s potential for positive economic shocks, Reuters reported.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned Friday that artificial intelligence (AI) could trigger negative economic shocks if anticipated productivity gains take longer than expected, even as the technology strengthens global growth.

Speaking at an IMF-World Bank panel in Bangkok alongside Anthropic co-founder Jack Clark, Georgieva said, "If there are no safeguards, then the risks may exceed the opportunities.”

“Above all, we do need an ethical foundation, ​and I'm not sure we are there as a society," the IMF chief added.

Georgieva Calls For AI Safeguards

Georgieva advocated a combination of industry self-regulation and government involvement, including from the U.S., China and India. She highlighted access to electricity and digital infrastructure as essential to ensuring AI's benefits are widely shared.

Harvard economist Dani Rodrik also reiterated Georgieva's warning that disappointing productivity gains could result in a costly financial correction following substantial data-center investments.

IMF Flags Growing Hyperscaler Debt, Circular Financing Risks

In an IMF blog titled "The World Can't Afford to Get AI Wrong," Georgieva highlighted growing financial risks stemming from hyperscalers' increasing reliance on debt to fund AI infrastructure.

Their share of investment-grade bond issuance has increased more than tenfold in two years, rising from less than 1% to 10% and growing, according to the blog.

Georgieva also warned about circular financing arrangements in which hyperscalers invest in AI developers that subsequently purchase computing capacity from those same companies.

The IMF's October report examined 14 such transactions since 2023, identifying approximately $300 billion in equity investments and $650 billion in debt tied to $1.4 trillion in future revenue commitments.

Earnings Disappointments, Cyberattacks Could Pressure Valuations

Georgieva's blog warned that significant revenue or earnings disappointments by AI developers could undermine profitability expectations and pressure equity valuations.

A severe correction could spread through the leveraged, interconnected AI ecosystem, with losses potentially reaching global investors, the blog warned.

She also noted that AI-powered cyberattacks targeting payments, trading systems or access to bank deposits could cause immediate losses and undermine financial confidence.

However, the IMF estimated that AI could boost annual global economic growth by roughly half a percentage point over the next decade if productivity improvements materialize.

Meanwhile, Reuters reported that U.S. Treasury Undersecretary Erin Browne pushed back against the IMF's emphasis on downside risks, arguing that the fund should give greater weight to AI's potential to deliver positive economic shocks.

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