Bri: AI boom, inflation and debt pose risks to growth and stability

(Il Sole 24 Ore Radiocor) - The potential artificial intelligence bubble, high levels of public debt combined with that of hedge funds, inflation and supply-side shocks are the sources of economic tension that could jeopardise global economic growth. This is according to the Bank for International Settlements in its Annual Economic Report.

"The sustainability of the artificial intelligence boom, financial vulnerabilities and public finances under pressure are among the critical issues facing the global economy, alongside the return of inflation," the institute summarises.

"Inflation has risen: in a context characterised by increasingly frequent negative supply shocks, a key risk is that higher inflation could become endemic should inflation expectations lose their anchor," writes the BIS - “This could fuel inflationary pressures even after energy flows and oil prices have normalised following the opening of the Strait of Hormuz.”

"Optimism about artificial intelligence may not last, despite its promise of future productivity gains," he adds, referring to the sustainability of the current valuations attributed to new technologies. "The current surge in capital expenditure could prove unsustainable if supply bottlenecks were to limit production. Furthermore, intense competition for market leadership could fuel over-investment, as observed in previous waves of innovation.”

fon