> How the AI Investment Craze Is Keeping the Global Economy Afloat

TOKYO—In the past few weeks, Canada and the U.S. have launched a bitter trade war, President Trump has escalated his campaign against Iran and bond yields have surged, kindling fears over higher borrowing costs around the world.

The global economy, to some surprise, has taken it all in its stride.

Oil prices remain steady at less than $90 a barrel and stock markets are trading close to recent highs. Summer brought a growth spurt to advanced economies, according to closely watched business-activity surveys, and global trade is buoyant.

Behind this rosy picture is the artificial-intelligence boom that is fueling an investment surge in the U.S. and rocketing exports in Asia.

Those tailwinds are lifting global growth, even as the Strait of Hormuz remains shut and geopolitical tensions persist.

ING estimates the AI frenzy accounts for around a third of the U.S. economy’s recent growth, as the data-center build-out sucks in semiconductors, electronics, cables, metals and machinery from around the world.

Exports from China were up by a quarter in July compared with a year earlier, while exports from Japan rose 22%. Taiwan’s exports were up by a third and South Korea’s jumped 63%.

Even smaller economies such as Thailand are reporting bumper exports as the fever intensifies. Singapore’s government upgraded its growth forecast for the year, saying it expects its economy to expand up to 5.5% this year, from 4% previously, as it too benefits from rampant demand for semiconductors and other AI-related components.


The question now for many economists is, will it last? And how vulnerable will the global economy be if this critical engine of demand falters?

“Maybe we are just living on borrowed time,” said Stefan Angrick, head of Asia-Pacific Economics at Moody’s Analytics.

https://www.wsj.com/economy/global/how- … =djemITP_h