Artificial Intelligence Investment Buffers Energy Shock, IMF Notes

In its World Economic Outlook, the IMF highlighted a surprising source of support for India’s growth amid rising energy bills: accelerated investment in artificial intelligence and related digital technologies.

The fund argues that AI‑driven productivity gains are helping firms offset higher input costs, particularly in energy‑intensive sectors such as manufacturing and logistics. This technological push is also fostering a new wave of high‑value exports within the global tech value chain.

At the same time, the IMF raised its global headline inflation projection for 2026 to 4.7 percent, signalling that the post‑pandemic disinflation trend has stalled. However, the report points out that AI‑enabled efficiencies could moderate the pass‑through of energy price spikes into consumer prices.

The fund’s analysts expect the combined effect of stronger domestic demand and technology‑led productivity to keep India’s medium‑term growth near 6.5 percent, provided that external energy shocks recede.