An artificial-intelligence bust (and thus bubble), inflation and fiscal stress are the three the most alarming threats to global prosperity at present, the Bank for International Settlements warned. In its annual report published on Sunday, the Basel-based institution – better known as the central banks’ central bank – cited those on a list of “pressure points” that currently “demand attention,” with underlying financial vulnerabilities lurking that could amplify any shock.
“The global economy remains caught in the crosscurrents of progress and peril,” Basel officials said in the report. “Resilience is being increasingly tested and strained.”
The assessment highlighted AI-led risks prominently in a report that arrived on the eve of the ECB’s three-day annual symposium in Sintra, where a host of global policymakers will also scrutinize such stability dangers closely.
“Disappointment in returns could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust, with potential knock-on effects on financial conditions,” the BIS said, before observing that “a major equity-market correction could have larger macroeconomic consequences today than in the past.”