AI investment boosts Asia's growth prospects but raises fears over jobs and inequality

Artificial intelligence investment is helping sustain global growth at around 3 per cent, with Asia poised to reap major benefits. But soaring energy costs, unequal investment and growing pressure on young workers threaten to leave some economies behind.

Artificial intelligence investment could lift growth in advanced Asian economies by up to one percentage point, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Monday, as a surge in spending on the technology helps sustain global economic growth at around three per cent. 

Speaking at the IMF and World Bank annual meetings in Bangkok, Georgieva said AI investment could add 0.5 to one percentage point to growth in advanced Asian economies, and between 0.2 and 0.8 percentage points in emerging Asian economies, Reuters reported.

The spending boom is providing a boost to economic activity despite mounting pressure from energy prices. In a 7 October assessment, the IMF said oil prices were around $100 a barrel, while severe disruptions to liquefied natural gas shipments from the Gulf were pushing up energy costs, particularly in Asia and Europe.

Asia stands to gain more than stronger growth figures. The region produces much of the hardware needed to power AI, placing several economies at the centre of an investment boom transforming global trade.

But will the benefits reach beyond the countries producing the technology?

Asia's hardware advantage

Asia has entered the AI investment boom with far greater economic influence than it held three decades ago.

In a speech delivered in Singapore on 7 October, Georgieva said Asia-Pacific's share of global GDP, measured by purchasing power parity, had risen from 25 per cent in 1991 to 43 per cent.

That transformation reflects decades of industrial development and deeper integration into global supply chains, which are now helping the region meet soaring demand for advanced chips, memory components and computing equipment.

According to the IMF, AI hardware and related technology products already account for more than 10 per cent of global goods trade.

The U.S., China and India are major net importers of AI hardware as they race to expand their computing capacity. Of the seven other economies in the IMF's top 10 AI hardware supply chains, five are Asian suppliers manufacturing everything from microprocessors and chip-making machinery to robotics equipment.

While much of the attention on AI centres on software and large language models, the technology also relies on vast physical infrastructure, giving Asian manufacturers a crucial role in its expansion.

Investment creates uneven gains

The scale of AI spending highlights why the technology has become such a powerful driver of economic growth.

Stanford University's 2026 AI Index found that global corporate AI investment more than doubled in 2025 from the previous year, while private investment jumped 127.5 per cent.

Generative AI attracted nearly half of all private AI funding. Private AI investment in the U.S. was 23 times higher than in China in 2025, although Stanford noted that its figures did not fully capture Chinese government-backed financing.

For Asian hardware exporters, the surge in infrastructure spending offers opportunities to increase production, expand exports and strengthen their position in global supply chains.

But not every economy stands to benefit equally.

Countries already established in advanced technology manufacturing are well placed to profit from rising demand. Those without such industries risk becoming buyers of AI technology rather than beneficiaries of the investment driving its development.

Georgieva warned in her 7 October speech that AI-related investment was largely bypassing many economies, raising concerns that the boom could deepen global inequality.

This uneven distribution casts a shadow over the IMF's optimistic outlook. Asia may be among the biggest winners, but the rewards could remain concentrated in a handful of countries and industries.

Rising energy costs threaten gains

The AI investment boom faces another major obstacle: rising energy costs.

Georgieva has described AI investment as a positive shock to demand, partly offset by a negative shock to energy supply.

The competing forces are especially significant for Asia. Strong demand for chips and computing equipment is boosting manufacturing and exports, but both semiconductor production and the data centres powering AI require enormous amounts of electricity.

As AI infrastructure expands, growing electricity demand could strain energy systems already struggling with supply constraints.

Higher energy costs also hit manufacturers, transport operators and households, fuelling inflation and threatening to undermine the economic benefits of investment.

For Asian economies, attracting AI investment is only part of the challenge. Keeping energy costs under control will be equally important if the region is to maximise its gains.

Young workers face growing uncertainty

The consequences of AI are also being felt beyond factories, trade and financial markets, with younger workers facing an increasingly uncertain future.

Georgieva warned at the Bangkok meetings that AI could enhance, reduce the importance of or eliminate tasks linked to around 40 per cent of jobs worldwide.

Singapore's President Tharman Shanmugaratnam also expressed concern about shrinking opportunities for graduates entering the labour market.

Stanford's AI Index suggests that some younger workers in the U.S. are already facing mounting pressure.

Employment among U.S. software developers aged 22 to 25 has dropped by nearly 20 per cent since 2024, according to the report. Around one-third of surveyed organisations expect AI-related workforce reductions.

However, the findings do not prove that AI alone caused the decline. Stanford also noted that widespread job losses have yet to emerge in overall employment figures.

Even so, the trend raises concerns for Asian economies that have built their growth on education, technical expertise and expanding professional employment.

AI could boost productivity while reshaping the skills employers demand, particularly for entry-level roles traditionally filled by graduates.

Can AI deliver growth beyond the investment boom?

For emerging Asian economies, the greatest long-term benefits may come not from building AI infrastructure, but from using the technology to improve existing industries.

World Bank President Ajay Banga told the Bangkok meetings that smaller-scale AI applications could raise productivity in agriculture, healthcare and education, especially in developing countries.

Unlike the most advanced AI models, these applications do not necessarily require vast computing resources or enormous capital investment.

That offers a potential route to growth for economies unable to compete in the expensive race to develop cutting-edge AI systems.

In her 7 October speech, Georgieva said IMF research suggested that effective AI adoption could eventually add up to half a percentage point to annual global growth.

Over a decade, she estimated, the additional economic output could be equivalent to adding an economy the size of the Association of Southeast Asian Nations (ASEAN) to the global economy.

But realising that potential will require stronger digital infrastructure, better workforce skills and effective regulation.

Asia has already established itself as a vital hub in the global AI supply chain, and the IMF's latest assessment points to substantial opportunities for further growth.

The bigger test is whether those gains extend beyond chip factories and data centres to businesses, workers and developing economies across the region.

Ultimately, Asia's AI success will be measured not just by how much investment it attracts, but by how widely the benefits are shared.

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IMF World Bank AI Investments Asia