IMF Sees Threat to World Economy if AI Falls Short

The IMF is reportedly warning of a threat to the world economy from an AI downturn.

In its latest World Economic Outlook, published Monday (Jan. 19), the International Monetary Fund (IMF) said that if predictions about productivity advances fueled by artificial intelligence (AI) turned out to be too rosy, it could lead to a wider downturn.

“Reevaluation of productivity growth expectations about AI could lead to a decline in investment and trigger an abrupt financial market correction, spreading from AI-linked companies to other segments and eroding household wealth,” the report said.

The IMF also noted an upside: activity could be further buoyed by AI investment and yield sustainable growth if faster AI adoption “translates into strong productivity gains and increased business dynamism.” Economic activity could also be helped by the easing of trade tensions.

“There is a risk of a correction, a market correction, if expectations about AI gains in productivity and profitability are not realised,” Pierre-Olivier Gourinchas, IMF chief economist, said during a press briefing on the report.

He added that while the economy had not yet reached the “levels of market frothiness” seen during the dotcom bubble, there were still reasons to be concerned.

In other AI news, PYMNTS wrote last week about new research showing that consumers are increasingly beginning their online experiences with the technology.

“Dedicated AI platforms, from conversational agents to multimodal assistants, are becoming the place where intent is first expressed,” the report said. “Planning a trip, comparing products, understanding a new topic, or deciding what to buy is no longer routed through search engines or individual apps. Instead, it starts with a prompt.”

More than 60% of American adults used a dedicated AI platform last year, and among Generation Z and heavy users, upwards of a third now turn to AI when beginning personal tasks, according to the December edition of the Agentic AI Report by PYMNTS Intelligence.

“That shift may look subtle on the surface, but structurally, it represents one of the most consequential changes in digital behavior since the rise of mobile,” PYMNTS added.

However, that report continued, not all AI use holds the same weight. A major distinction is emerging between AI that reinforces habits and AI that replaces them. When consumers encounter artificial intelligence via embedded features such as search summaries, smart suggestions or in-app assistants, they tend to view it as an enhancement.

By contrast, dedicated AI platforms are creating habit displacement. Users who start with a standalone AI assistant are more likely to cut back traditional search usage and completely bypass intermediary sites.

“The environment matters,” PYMNTS added. “When AI is the primary interface, it becomes the cognitive hub through which tasks are routed.”