Singapore’s Monetary Authority (MAS) warns that the global economy’s heavy dependence on AI-driven investments could trigger a sharp slowdown if expectations shift. Chia Der Jiun, MAS Managing Director, highlighted that AI-related capital spending now represents a significant chunk of US GDP growth, making the economic outlook fragile.
AI Spending Concentration and Rising Costs
Investments in hyperscale data centers alone are expected to hit hundreds of billions of dollars in 2026. Current stock valuations seem to bet on these investments paying off handsomely, but even a slight reassessment could slow or reverse growth. This fragility is compounded by rising costs energy prices and semiconductor chips, key for AI infrastructure, keep climbing, squeezing profit margins.
Uneven Benefits and MAS’s Regulatory Approach
Chia also warned that AI’s economic gains might concentrate within a few companies and sectors, deepening income inequality rather than boosting overall prosperity. The MAS has been preparing for these challenges. Since November 2025, it has issued AI risk management guidelines aimed at integrating AI responsibly into financial services. Projects like PathFin.ai and MindForge promote ethical AI adoption, marking a steady regulatory path leading up to Chia’s recent warnings.
This content is for informational purposes only and does not constitute financial advice.
