KINGSTON, Jamaica—The artificial intelligence (AI) investment boom has been helping to cushion the global economy against higher energy prices and geopolitical tensions, but its benefits remain unevenly distributed and could introduce new inflationary and financial risks, the International Monetary Fund (IMF) has warned.

In its latest World Economic Outlook (WEO) report, the IMF said strong investment in AI had provided an important source of demand, helping global economic activity perform better than expected in the first half of the year despite the prolonged war in the Middle East and continuing trade tensions.

“The AI-driven technology momentum provides an important offset to the geopolitical headwinds,” the IMF said in the recently released October issue.

However, the fund cautioned that the global economy, while “again proving resilient”, faces increasingly narrow margins for adjustment in the near term, with those countries benefiting from technology-related exports and investment better positioned than those grappling with higher import costs and weaker demand.

Based on its latest projections, the international financing body said it expects the global economy to grow by approximately 3.1 per cent this year — up from its previous forecast of 3 per cent, but below the 3.5 per cent expansion recorded in 2025. Growth is however, expected to improve to 3.4 per cent in 2027.

The improved outlook partly reflects surging investment in advanced semiconductors, data centres and cloud infrastructure, which has boosted trade and demand, while creating opportunities for productivity gains.

“In addition to highly concentrated short-term effects on demand, AI will also likely bring in supply effects, but it remains unclear when and by how much,” the IMF said.

The fund, in warning that the benefits of the technology boom are likely to remain concentrated among a relatively small group of economies, said this was largely due to the dominance of a few countries in advanced computing hardware production, and the development of leading AI models.

Taiwan and South Korea now account for about 62 per cent of net trade in AI-related computing hardware, while the United States and China accounted for more than 75 per cent of net imports of such hardware in 2025, and 57 per cent of newly-built data centres since 2024.

This concentration places economies with established positions in technology supply chains in a stronger position to benefit directly from the investment surge.

“A greater-than-expected AI build-out could increase world GDP by 0.6 per cent by 2029, with larger effects in the United States and Asia,” the IMF said.

While AI-related spending has been supporting demand, the IMF further warned that the surge in investment was also creating inflationary pressures and potential financial vulnerabilities.

“This is a large, front-loaded demand shock exposing capacity constraints in several sectors at once. Spending on semiconductors, data centres, cloud infrastructure, electricity generation, grid connections, cooling systems, and specialised real estate raises demand for capital goods, construction services, land, energy and skilled labour before any broad productivity gains have materialised,” the entity further said. It noted that although spillovers into core inflation in major economies appear limited so far, stronger demand could increase broader price pressures as it amplifies the pass-through of higher headline inflation into underlying inflation.

As the divide between economies benefiting from the technology boom and those exposed to higher energy costs continues to shape the outlook for developing nations, countries such as India are projected to grow by 7 per cent in 2026, supported by resilient domestic demand and strong services activity. Several South-East Asian economies are also expected to benefit from data centre development and a broader uptick in technology investment.

Small island developing states are, on the other hand, expected to experience slower growth as higher energy costs combine with weaker tourism and remittance flows, weigh on out-turns.

“In Latin America and the Caribbean, growth is projected to edge down to 2.3 per cent in 2026 and to pick up modestly to 2.5 per cent in 2027,” the IMF said.

For Jamaica and other Caribbean economies, the outlook underscores the challenge of managing energy-related pressures while positioning businesses and workers to benefit from wider AI adoption.

The report did not, however, provide a country-specific estimate of AI’s potential contribution to economic growth.

As economies continue to push forward, the IMF said policymakers must contain inflationary and other financial risks while ensuring that AI-driven productivity gains extend beyond a small group of economies.

“Energy-importing economies with limited exposure to the technology value chain — including many low-income and vulnerable countries — face stronger headwinds, underscoring the importance of continued fund support,” the report further outlined.