AI Development Poses Growing Macroeconomic and Financial Risks to Global Economy

The rapid development of Artificial Intelligence (AI) is creating new macroeconomic and financial vulnerabilities globally. While AI investment has supported economic activity, it has led to increased reliance on debt and complex financing structures, raising concerns about elevated asset valuations, concentration among a few companies, and heightened financial interconnectedness. A sharp repricing of AI-related assets due to weaker earnings or reduced investment could trigger financial spillovers, worsening global financial conditions amidst already high sovereign bond yields.