{"id":22622,"date":"2026-01-20T08:05:52","date_gmt":"2026-01-20T06:05:52","guid":{"rendered":"http:\/\/jhb-webdevelopers\/channelafrica\/?post_type=news&#038;p=22622"},"modified":"2026-02-27T16:33:33","modified_gmt":"2026-02-27T14:33:33","slug":"global-economy-shows-resilience-but-tech-driven-risks-trade-disruptions-pose-growing-threats","status":"publish","type":"news","link":"https:\/\/www.channelafrica.co.za\/channelafrica\/news\/global-economy-shows-resilience-but-tech-driven-risks-trade-disruptions-pose-growing-threats\/","title":{"rendered":"Global economy shows resilience but tech\u2011driven risks, trade disruptions pose growing threats"},"content":{"rendered":"<p><span data-preserver-spaces=\"true\">Forecasts <\/span><span data-preserver-spaces=\"true\">show<\/span><span data-preserver-spaces=\"true\"> global growth <\/span><span data-preserver-spaces=\"true\">holding<\/span><span data-preserver-spaces=\"true\"> steady at 3.3% in 2026, <\/span><span data-preserver-spaces=\"true\">an upward revision of<\/span><span data-preserver-spaces=\"true\"> 0.2 percentage <\/span><span data-preserver-spaces=\"true\">points<\/span><span data-preserver-spaces=\"true\"> from October estimates, <\/span><span data-preserver-spaces=\"true\">driven <\/span><span data-preserver-spaces=\"true\">largely<\/span><span data-preserver-spaces=\"true\"> by improved outlooks in the US and China.<\/span><span data-preserver-spaces=\"true\"> Remarkably, the projection remains broadly unchanged from a year ago, suggesting the world economy has shaken off the immediate impact of the tariff shock.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">This resilience <\/span><span data-preserver-spaces=\"true\">is attributed<\/span><span data-preserver-spaces=\"true\"> to a combination of easing trade tensions, stronger\u2011than\u2011expected fiscal stimulus, accommodative financial conditions and the private sector\u2019s ability to adapt to trade disruptions. Emerging market economies have also benefited from improved policy frameworks.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">A major driver is a continued surge in investment in the information technology sector, particularly in artificial intelligence (AI). Although global manufacturing remains subdued, IT investment in the US has climbed to its highest share of output since 2001. While concentrated in the US, the boom has delivered positive spillovers, notably boosting Asia\u2019s technology exports.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Optimism around AI and automation has lifted stock markets sharply since late 2022, when the first widely used generative AI tools emerged. Favourable financial conditions and strong corporate earnings have fuelled capital spending, but firms are increasingly turning to debt to finance expansion, raising concerns about rising leverage.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Analysts warn that heavy reliance on debt could magnify risks if expected returns fail to materialise or if financial conditions tighten. Frequent, costly upgrades to advanced processors could also tighten profit margins and put additional pressure on firms\u2019 balance sheets.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Comparisons with the dot\u2011com boom of 1995\u20132000 are instructive. While IT investment levels today resemble those of that earlier period, the increase has been more gradual. Market valuation growth, relative to economic size, mirrors the dot\u2011com pace, but price\u2011earnings ratios remain lower due to <\/span><span data-preserver-spaces=\"true\">stronger<\/span><span data-preserver-spaces=\"true\"> earnings.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Current analysis suggests any overvaluation in the US equity index is only about half the level of the dot\u2011com bubble. Even so, global vulnerabilities remain significant for three reasons:<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Stock market gains are driven by a narrow group of AI\u2011related companies, increasing exposure to a concentrated sector.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Many key AI firms <\/span><span data-preserver-spaces=\"true\">are privately held<\/span><span data-preserver-spaces=\"true\">, meaning their rising debts carry risks not seen in the dot\u2011com era.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Market capitalisation is now far higher relative to output, making even a modest correction impactful.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">AI could deliver productivity gains that lift global growth by 0.3% this year. But downside risks remain substantial. <\/span><span data-preserver-spaces=\"true\">If <\/span><span data-preserver-spaces=\"true\">AI\u2011related<\/span><span data-preserver-spaces=\"true\"> firms fail to deliver strong earnings<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">or if valuations fall, global growth could drop by 0.4% compared <\/span><span data-preserver-spaces=\"true\">with<\/span><span data-preserver-spaces=\"true\"> baseline forecasts.<\/span> <span data-preserver-spaces=\"true\">A sharper decline in tech investment could trigger broader economic losses, particularly in <\/span><span data-preserver-spaces=\"true\">tech\u2011heavy<\/span><span data-preserver-spaces=\"true\"> economies <\/span><span data-preserver-spaces=\"true\">like<\/span><span data-preserver-spaces=\"true\"> the US and Asia.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Given rising foreign ownership of US equities, a market correction would reverberate globally, <\/span><span data-preserver-spaces=\"true\">shrinking<\/span><span data-preserver-spaces=\"true\"> consumption in many countries.<\/span> <span data-preserver-spaces=\"true\">Even <\/span><span data-preserver-spaces=\"true\">low\u2011income<\/span><span data-preserver-spaces=\"true\"> and <\/span><span data-preserver-spaces=\"true\">high\u2011debt<\/span><span data-preserver-spaces=\"true\"> nations with limited tech exposure would be <\/span><span data-preserver-spaces=\"true\">hit<\/span><span data-preserver-spaces=\"true\"> by weaker external demand and higher borrowing costs.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">With valuations stretched and leverage rising, economists warn that strong regulatory oversight is essential. Financial supervisors must ensure robust lending standards across the banking and non\u2011banking sectors, particularly in tech\u2011linked industries. <\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Central banks should remain independent, maintaining focus on price stability while preparing for either tightening or easing, depending on how the tech boom evolves.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Governments <\/span><span data-preserver-spaces=\"true\">are urged<\/span><span data-preserver-spaces=\"true\"> to reduce debt and rebuild fiscal space. Policymakers must also address AI\u2019s uneven labour impacts through skills training, mobility support and competitive markets to ensure innovation benefits are widely shared.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">Global growth has <\/span><span data-preserver-spaces=\"true\">held firm<\/span><span data-preserver-spaces=\"true\"> despite trade disruptions, but underlying vulnerabilities, <\/span><span data-preserver-spaces=\"true\">especially<\/span><span data-preserver-spaces=\"true\"> the concentration of investment in the tech sector, <\/span><span data-preserver-spaces=\"true\">remain<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> AI\u2019s transformative potential brings opportunity but also significant financial and structural risks. <\/span><span data-preserver-spaces=\"true\">In an era of growing geopolitical tensions and weakening institutional frameworks, <\/span><span data-preserver-spaces=\"true\">the challenge for policymakers is to encourage<\/span><span data-preserver-spaces=\"true\"> innovation while preventing a <\/span><span data-preserver-spaces=\"true\">boom\u2011bust<\/span><span data-preserver-spaces=\"true\"> cycle that could undermine global stability.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><span data-preserver-spaces=\"true\">&#8211;IMF\/ChannelAfrica&#8211;<\/span><\/p>\n","protected":false},"featured_media":22624,"template":"","meta":{"_acf_changed":false},"news-type":[44],"class_list":["post-22622","news","type-news","status-publish","has-post-thumbnail","hentry","news-type-finance","entry"],"acf":{"short_description":"","published_date":null,"news_description":"Global economic growth is proving more resilient than expected despite significant United States (US)\u2011led trade disruptions and heightened uncertainty, according to the latest projections. 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