German Institutes Report: Artificial Intelligence Boosts the Economy

According to a joint forecast report prepared by Germany's leading economic research institutes, while the global economy is gaining momentum, artificial intelligence investments are providing strong support to production in the US and Asia. However, the report emphasizes that the energy shock caused by conflicts in the Gulf and high interest rates create significant risks.

Artificial Intelligence and Production

The expansion of computing capacity and energy infrastructure for artificial intelligence is directly supporting industrial production, notably in the US and China. Production growth has become evident in advanced Asian economies such as Taiwan and South Korea.

The increase in defense spending is also among the findings in the report that upwardly supports economic demand in many different countries.

Energy Shock and Conflicts

It was stated that the negative impact of military conflicts in the Gulf region on industrial production has largely remained limited to the countries in that region.

While industrial production declined in the Middle East and Africa in March when the war started, production maintained its stability in other developing economies.

Growth and Trade Forecasts

It was recalled that global production is expected to grow by 2.6 percent in 2026, while this rate stood at 2.8 percent last year.

It is estimated that the growth rate will slow down to 2.5 percent in 2027 and 2028, and trade in goods and services will increase by 5.3 percent this year.

Risks and Warnings

Capacity bottlenecks observed in capital goods production lead to significant price increases and create various risks.

A warning was issued that sharp corrections in corporate valuations could occur if profit expectations from artificial intelligence investments are not met.