AI investment helps support global economic resilience despite energy shock

Yesterday 20:32

By: Azzat Manal

AI investment helps support global economic resilience despite energy shock

Strong investment in artificial intelligence is helping sustain global economic activity as countries face renewed pressure from higher energy prices and geopolitical uncertainty, according to the OECD’s latest Interim Economic Outlook. The organisation said the global economy has absorbed the recent energy shock better than initially expected, although significant risks remain.

The OECD projects global economic growth at 2.9% in 2026, an upward revision from its previous estimate of 2.8%. Growth is then expected to reach 3.0% in 2027, slightly below the organisation’s earlier projection of 3.1%. The revisions reflect the resilience of economic activity but also the impact of persistent energy and inflation pressures.

AI-related investment has emerged as an important source of momentum. Spending on data centres, semiconductors, computing infrastructure and other technologies is supporting production and trade, particularly in the United States and Asia. The OECD noted that strong activity linked to AI has helped offset some of the effects of weaker demand and higher energy costs.

The technology boom, however, is also creating new financial vulnerabilities. Major technology and cloud-computing companies continue to plan substantial capital expenditure, reflecting expectations of strong future earnings. The OECD warned that if those returns fail to meet investor expectations, financial markets could experience a sharp repricing, potentially weakening investment and economic growth.

Energy markets remain another major source of uncertainty. The economic impact of disruptions linked to the conflict in the Middle East has so far been limited by alternative supply routes, additional production outside the Gulf, the use of strategic reserves and lower oil consumption. These adjustments have helped prevent a larger shock from spreading across the global economy.

Inflation nevertheless remains under pressure. The OECD expects headline inflation across the G20 to rise to 4.1% in 2026 before easing to 3.6% in 2027. Higher energy and food prices could reduce household purchasing power and place additional pressure on businesses and governments.

Financial markets are facing additional risks from elevated long-term government bond yields. Higher borrowing costs can increase debt-servicing expenses for governments while also putting pressure on companies and households. The OECD has warned that a combination of energy disruptions, higher food prices, rising borrowing costs and weaker-than-expected AI investment returns could reinforce existing vulnerabilities.

In an illustrative downside scenario, the OECD estimates that persistent energy and food price pressures combined with tighter financial conditions could reduce global growth by 0.7 percentage points in 2027 and increase inflation by 1.1 percentage points. The organisation stresses that this is not its baseline forecast, but rather an indication of how several risks could interact.

For policymakers, the challenge is therefore to preserve the economic benefits generated by technological investment while limiting financial and macroeconomic vulnerabilities. The OECD recommends targeted and temporary measures to cushion households and businesses from energy shocks, while maintaining incentives for energy efficiency and protecting investment in skills, infrastructure and digital technologies.

The latest outlook suggests that AI is becoming an increasingly important component of global economic growth, but its contribution cannot be considered risk-free. The sustainability of current investment levels, future productivity gains and the ability of economies to manage energy and financial shocks will remain central to the global economic outlook through 2027.