Photo: World Bank Group/ Grant Ellis / Wikimedia Commons, CC BY-SA 4.0
A slowdown in AI-driven growth would become a key consideration for central banks fighting stubborn inflation, IMF Managing Director Kristalina Georgieva has said.
Warning after market volatility
Speaking in Washington on Friday, Georgieva said the rapid expansion in AI-related investment has supported growth in some economies, but has also added to inflationary and financial-stability pressures.
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Her remarks came after a sharp sell-off in technology shares, reflecting investor unease over elevated valuations and the scale of spending on data centres, chips and other AI infrastructure. Georgieva said continuing market swings would make central banks’ work more difficult at a time when risks to price stability remain high.
The International Monetary Fund has identified the AI investment cycle as an important force lifting global activity and trade. But it has also warned that economic gains are concentrated among a relatively small group of countries, firms and sectors.
What a reversal could mean
The Fund’s October outlook projects global growth of 3.1% in 2026 and 3.4% in 2027, with AI investment helping counter the economic drag from higher energy prices and geopolitical disruption.
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However, the IMF has also modelled the risks of a retreat in AI investment. In one scenario, a reversal could reduce global GDP by as much as 0.4% by 2028, while investment could fall by 1.3%. Such a shock could also depress asset prices and consumer spending.
For central banks, the challenge is that an AI-led boom can increase demand and prices in the short term, while a sudden pullback could weaken growth and tighten financial conditions. Georgieva said policymakers would need to factor either outcome into decisions on interest rates and inflation control.
Why it matters for Black economies
The stakes are high for African, Caribbean and diaspora economies that are not yet deeply embedded in the AI hardware and data-centre supply chain. The IMF has warned that AI-related investment and supply chains are concentrated, creating potential bottlenecks and uneven gains.
Countries with limited digital infrastructure, constrained electricity systems or high borrowing costs risk being left out of a productivity upswing while remaining exposed to the effects of a global market correction. A downturn in major economies can reduce trade, investment flows and access to finance for developing states.
That makes investment in reliable power, affordable connectivity, digital skills and stronger financial safeguards essential. AI may offer new opportunities for Black entrepreneurs and public services, but the benefits will not spread automatically.
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Georgieva’s intervention underlines a wider message from the IMF: AI is already influencing the global economic outlook, but its promise must be matched by careful policy, resilient institutions and broader access to the technology’s gains.