IMF chief says AI-driven growth leaves world on ‘one leg’

Federal Reserve Chair Kevin Warsh called artificial intelligence "probably the most consequential change" to the U.S. and global economies in his lifetime. Speaking in Bangkok on Friday, October 16, he also warned that the road to its benefits would be "very bumpy". Warsh spoke in a fireside chat with IMF Managing Director Kristalina Georgieva at the IMF-World Bank Annual Meetings. During the week, policymakers described the AI boom as a major support for global growth and also a growing source of financial risk.france24.com+1

Warsh Sees a 'Bumpy' Path

Warsh said AI would change the real economy, but that "we don't know in the next 12 or 18 months its effect on employment". He expects the technology to affect demand first and supply later. He predicted a medium-term supply shock and "a huge benefit to the global economy, to the U.S. economy". He said the turbulence would come from gaps "in our understanding of the technology" and because "we really don't know what the market structure is going to be".finance.yahoo.com+2

Warsh also told central bankers they "got to recognize this as a shock," because the flood of AI spending is pushing up demand. He gave no signal about the Fed's next rate decision, which is due October 28.abcnews.com+1

IMF Flags Stability Risks

Georgieva told AFP that "if there is loss of confidence and money runs away from AI, that can lead to financial stability risks," and said any slowdown "would be felt across the world". The IMF's October 2026 Global Financial Stability Report came out on Tuesday, October 13. It found that an unwinding of the AI investment boom could cut global GDP by 0.4% by 2028, and investment by 1.3%. "Weaker or less durable AI investments and profitability could be a shock that triggers a market correction," the report said.english.ahram.org.eg+1

AI spending has helped cushion the blow of high energy prices caused by war in the Middle East. IMF chief economist Silvana Tenreyro said global trade grew 8.3% from 2023 to 2025, but would have grown about 4.6% without AI-related products. Economists at Moody's Analytics ↗ 0.29% warned that a prolonged conflict could "puncture" the boom.france24.com

Standing on 'One Leg'

Regulation was a key debate in Bangkok. Georgieva said that "if there are no safeguards, then the risks may exceed the opportunities". As the meetings closed on Saturday, she described a mood of "optimism and worry." She said that relying on AI for growth is "like we stand on one leg".uk.finance.yahoo.com+1