IMF flags AI risks as slump could leave 2028 global GDP 1.1% below forecast

Central banks must take account of any weakening in growth driven by artificial intelligence when deciding how to tackle persistent inflation, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said, as technology-stock volatility unsettled global markets.

Speaking at IMF headquarters in Washington on November 6, 2026, Georgieva highlighted concerns over elevated share valuations and economies’ growing reliance on investment in artificial intelligence (AI).

“Things are going up and down, and this is likely to continue,” Georgieva said, adding that market volatility would make central banks’ task more difficult as risks to price stability increased.

AI investment supports growth but adds inflation pressure

Georgieva described AI investment as a source of economic growth in some countries, helping cushion the disruption to oil supplies caused by the Middle East war. However, the investment boom was also contributing to inflationary pressure and raising concerns about financial stability.

Georgieva stressed that central banks would need to reassess their policy choices if that support for growth weakened while inflation remained stubborn.

“Should there be a slowdown in the AI-driven growth impulse, it would need to be factored in as central banks assess the necessary steps in the fight against stubborn inflation,” Georgieva said.

Technology sell-off reflects fears of tighter US rules

A sharp fall in technology shares on November 5 spread through global financial markets as investors worried that the Democrats’ victory in the US midterm elections would bring tougher scrutiny of AI and slow data-centre expansion. Investors moved into bonds to reduce their exposure to risk.

The prospect of tighter US regulation intensified existing doubts about whether the vast sums committed to AI infrastructure would generate adequate returns. The sell-off also triggered demands for additional collateral, known as margin calls, heightening anxiety among individual investors and hedge funds.

Democrats are preparing a series of bills covering AI systems and data-centre development ahead of taking control of Congress in January 2027, according to a November 6 Reuters report citing congressional aides and policy advocates.

The Democrats’ legislative plans would represent a substantial change from the Republican-led Congress, where lawmakers had concentrated on encouraging AI development and had not passed legislation restricting the technology.

IMF downside scenario puts global output 1.1% below forecast

The IMF identified a potential reversal of the AI investment boom as a significant threat to economic growth and financial stability in October. A prolonged Middle East war was among the other risks highlighted by the fund.

Under the IMF’s downside scenario, a sharp reduction in AI investment could trigger a steep fall in asset prices, leaving global gross domestic product 1.1% below the baseline forecast by 2028. US output would be 1.8% below its projected level.

The IMF figures describe potential losses relative to its baseline outlook under an adverse scenario, rather than forecasts of annual economic contraction.

Georgieva did not repeat those figures on November 6. Her remarks focused on recent financial-market volatility and the need for central banks to consider any slowdown in AI-led growth when assessing their response to inflation.