The world should watch for three possible bubbles in financial markets, including artificial intelligence, the head of the World Economic Forum said on Wednesday, in comments that came amid sharp declines in global technology stocks.
Brokers and analysts say the declines are cause for caution, but not panic, as markets have been hitting all-time highs and some valuations appear overstated.
“We could possibly see bubbles moving forward. One is a crypto bubble, the 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 center, Sao Paulo.
Governments have not been this indebted since 1945, he added.
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The head of the World Economic Forum warns of three possible ‘bubbles’ in the global economy
Markets have for months shrugged off concerns about high interest rates, persistent inflation and trade turmoil, fueled in part by expectations that AI could transform the outlook for the global economy and businesses.
AI offers the possibility of big productivity gains, but it could also threaten many white-collar jobs, said Brende, whose organization is best known for its annual meetings in Davos, Switzerland, where business and political leaders discuss pressing global challenges.
“What you could, in the worst case, see is that… there is a ‘Rust Belt’ in those big cities that have a lot of white-collar offices with white-collar workers who can be more easily replaced by this AI and higher productivity,” Brende said, citing recent job-cut announcements from companies like Amazon and Nestlé.
“We also know from history that technological changes over time lead to greater productivity, and productivity is the only way to increase prosperity over time,” he added.
“Then you can pay people better wages and you have more prosperity in society.”
With information from Reuters
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