Global economic growth and stock market valuations are becoming increasingly reliant on artificial intelligence (AI), creating new vulnerabilities even as the world economy has shown resilience through a series of major shocks, Singapore’s central bank chief said on Wednesday.
Speaking at the Lujiazui Forum in Shanghai, Chia Der Jiun, managing director of the Monetary Authority of Singapore (MAS), warned that a reassessment of expectations surrounding AI could trigger slower growth or market volatility.
“Global economic growth and equity market valuations are highly reliant on AI, and could slow sharply or reverse if investment assumptions are reassessed,” Chia said.
He noted that AI investments have provided a positive demand shock to the global economy since 2024, helping to support growth despite geopolitical tensions, trade disruptions and energy supply shocks. However, returns on AI investments remain uncertain, while the costs of energy and advanced semiconductor chips continue to rise.
Chia also highlighted longer-term concerns surrounding AI adoption, including whether adequate safeguards are in place and whether the economic benefits of the technology will be widely shared.
“The use of AI in the medium term poses many uncertainties. Risks can accumulate if safety is not sufficiently safeguarded and economic benefits are not widely shared,” he said.
His comments came as policymakers and investors increasingly debate whether massive spending on AI infrastructure, data centers and computing power will generate sufficient returns to justify current valuations.
More broadly, Chia said the global economy had endured five major demand and supply shocks over the past six years, including the COVID-19 pandemic, the Ukraine war, tariff disruptions in 2025, the AI investment boom and this year’s energy supply shock.
Despite the turbulence, growth recovered from 2023 onwards, inflation eased closer to central bank targets by 2024 and global trade continued to expand in 2025, he said.
However, Chia cautioned that governments have less fiscal room to respond to future crises after years of spending to support economies through successive shocks. Debt-to-gross domestic product (GDP) ratios in many advanced economies now exceed 100 percent, while average fiscal deficits remain above 5 percent of GDP.
He also warned that uncertainty remains over global energy markets despite recent progress toward reopening the Strait of Hormuz. A prolonged disruption could have a greater impact later this year as inventories decline and supplies of refined products tighten.
To strengthen resilience, Chia urged economies to maintain prudent fiscal and monetary policies, deepen local capital markets, diversify supply chains and pursue growth-enhancing reforms.
He also called for stronger regional cooperation, noting that trade between China and ASEAN surpassed US$1 trillion in 2025. Greater investment flows and capital market connectivity between the two regions could help support growth amid global uncertainty, he said.
Chia stressed that international institutions such as the International Monetary Fund, the Financial Stability Board and regional mechanisms including the Chiang Mai Initiative remain critical to preserving financial stability.
“Our response to an environment of frequent shocks, persistent uncertainty and fraying commitment to international cooperation on some fronts requires each economy to build resilience and recognize the benefits from greater cooperation,” he said.
Singapore urges ASEAN to embrace AI while avoiding data and sovereignty pitfalls