AI-related investment support global economic activity: RBI

Artificial intelligence (AI)-related investment and increased trade in AI-related hardware have supported global economic activity in 2026, even as geopolitical tensions, elevated energy prices, and trade disruptions weigh on the global outlook, the Reserve Bank of India (RBI) said in its October 2026 Monetary Policy Report.

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However, it warned that the downside risk also originates from potential sharp corrections in AI-related asset valuations which pose contagion risks to global financial markets.

The report cited the International Monetary Fund’s July 2026 outlook, which noted that AI-related investment and productivity gains are likely to bolster global growth. The Organisation for Economic Co-operation and Development (OECD’s) September 2026 outlook similarly expects AI-related activity to provide continued support.

In the United States, economic growth remained resilient, supported by consumer spending and investment, including continued private investment in AI and related technologies. This robust demand is also spilling over into global merchandise trade, it said.

The RBI report highlighted that rising trade in electronic components related to AI helped offset the negative impact of conflicts in West Asia, alongside continued momentum in other goods linked to AI investment.

Consequently, growth momentum has been stronger in advanced and emerging economies deeply integrated into AI and semiconductor value chains. Conversely, energy-importing and non-tech economies continue to face constraints from elevated energy prices, structural headwinds, and trade disruptions, it said.

Strong AI demand has also energised semiconductor markets. Taiwan and South Korea led emerging-market equity performance in the second quarter of 2026, driven by gains in memory and semiconductor stocks amid surging AI demand, though the AI-led rally showed signs of fatigue in the third quarter, according to the report.

On the financial front, global markets have been influenced by AI-driven risk appetite, with global equities advancing in the second quarter of 2026 on sustained momentum in AI and related capital investment cycles, it said.

On the upside, however, faster-than-anticipated AI-driven productivity gains could lift global growth above the baseline, according to the report.

 

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