AI spending helps save global economy under threat of trade war, IMF director says

The world economy has shown resilience despite US trade wars with its major trading partners, thanks in part to strong investment in artificial intelligence, according to an International Monetary Fund (IMF) director.

“The global economy remained resilient after the rising tariffs” partly as “the inflationary impact of higher tariffs has been relatively muted, against all odds”, said Jihad Azour, director of IMF’s Middle East and Central Asia Department, at Abu Dhabi Finance Week in the United Arab Emirates (UAE) on Monday.

“The flexibility in trade and trade rules has adjusted very quickly to the trade shock,” he said, echoing an IMF report in October that said the impact of the trade war had been less than expected as “the US negotiated trade deals with various countries and provided multiple exemptions”.

“The economy showed strength and resilience thanks to the increase in investment in AI globally, and especially in the US,” Azour said.

The Washington-based fund projected global growth of 3.2 per cent this year and 3.1 per cent next year, higher than its April projections when the trade war had just started.

Worldwide spending on AI was expected to total nearly US$1.5 trillion in 2025, a 50 per cent increase, which was set to further grow to top US$2 trillion next year, according to business intelligence firm Gartner. Major economies have invested in grand AI infrastructure projects, including the US’ Stargate, China’s “Eastern Data, Western Computing” strategy and the UAE’s own Stargate project involving OpenAI, Oracle and Nvidia.