World Economic Forum chief warns of three possible 'bubbles' in global economy
The warning comes amid sharp falls in global technology stocks
[SAO PAULO] The world should watch out for three possible bubbles in financial markets, including artificial intelligence, the head of the World Economic Forum said on Wednesday (Nov 5), in comments that came amid sharp falls in global technology stocks.
Brokers and analysts say the falls are a cause for caution but not panic as markets have been touching record highs and some valuations are looking overblown.
“We could possibly see bubbles moving forward. One is a crypto bubble, second an AI bubble, and the third would be a debt bubble,” WEF president Borge Brende told reporters during a visit to Brazil’s financial hub, Sao Paolo.
Governments have not been so heavily indebted since 1945, he added.
Markets have for months shrugged off concerns over elevated interest rates, stubborn inflation and trade turmoil, pushing higher partly on expectations that AI could transform the prospects for the global economy and businesses.
AI offers the possibility of big productivity gains but could also threaten many white collar jobs, said Brende, whose organisation is best known for its annual meetings at Davos, Switzerland, where business and political leaders discuss pressing global challenges.
“What you could – worst case – see is that... there is a ‘Rust Belt’ in those big cities that have a lot of back offices with white-collar workers that can more easily be replaced by this AI and increased productivity,” Brende said, citing recent job cut announcements from companies such as Amazon and Nestle.
“We also know from history that technological changes over time lead to increased productivity, and productivity is the only way over time to increase prosperity,” he added.
“Then you can pay people better salaries, and you have more prosperity in society.” REUTERS
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