BIS: Global economic risks are rising due to AI, debt, and inflation

BIS analysts pinpointed four main aspects influencing the global economy and heightening global risks. The initial issue is consistently elevated inflation. The report indicates that interruptions in supply chains are fueling elevated inflation expectations among both businesses and consumers. The BIS referred to the US-Iran deal and the reopening of the Strait of Hormuz as "positive news," saying this could help prevent severe situations.

The second element is the ambiguity linked to the AI surge and funding in these technologies. The BIS highlights that worries stem from both the over-investment in this domain and the potential adverse effects of AI on employment. Additionally, the analysts at the bank are worried about financial risks linked to inflated asset prices, along with the AI surge, which is primarily driven by borrowed capital.

A fourth issue of concern for the BIS is the ongoing increase of public debt in different nations. The report indicates that this establishes a "new connection between sovereignty and financial stability." BIS analysts urged global policymakers to implement a stricter strategy focused on decreasing public debt, controlling price rises, and ensuring financial sustainability.

source: bis.org