AI fuels ‘K’-shaped global economy, says Moody’s

The global economy is witnessing ‘K’ shaped growth where the artificial intelligence boom pushes some countries and industries ahead, leaving others behind, Moody’s Analytics said on Thursday.

In its Global Economy Outlook, Moody’s Analytics said it expects global growth to slow to 2.5 per cent in 2026 and pick up to just 2.8 per cent in 2027.

It said that booming demand for artificial intelligence has saved the global economy from a sharper slowdown, but geopolitical risks, stretched asset valuations, and volatility in financial markets could easily flip the outlook from slow growth to recession.

“The global economy is running at two different speeds. In some segments, growth is holding up better than expected, courtesy of the AI boom. But economies and industries less plugged into the AI boom have struggled,” Moody’s Analytics said.

The agency said AI boom has driven a surge in data centre investment, exports in Asia’s tech-heavy economies, and stock market valuations across the world. Geopolitical upheaval and trade disruptions, from the Middle East conflict to friction between the US and its trading partners, have driven up prices and the cost of doing business.

“The result is a K-shaped world economy where some countries and industries race ahead while others fall behind. Growth will slow in 2026, but by less than we expected at the start of this year,” Moody’s Analytics said.