“If the AI boom fades, the global economy could reel” ... Up to 80% of growth in global exports is concentrated

[Financial News] A boom in investment in artificial intelligence (AI) infrastructure has driven global trade and economic growth this year, but the boom is overly dependent on AI-related products and could become a serious vulnerability for the global economy, The Wall Street Journal (WSJ) reported on the 11th, local time.
The warning is that Asian exporters such as South Korea, which are struggling with weak domestic demand, could be hit hard.
According to the WSJ, London-based UK economic analysis firm Capital Economics said in a recent report that, excluding the rebounds after the COVID-19 pandemic and the 2008–2009 Global Financial Crisis, global trade is on track to record its strongest annual growth since globalization began in earnest in the early 1990s.
This trade boom depends on a U.S.-led data-center construction boom. Asian countries such as South Korea, China and Taiwan have sharply increased exports of related products, including semiconductors and server racks, to meet surging U.S. demand for computing power.


In October, South Korea's total exports rose 93.7% from the same period a year earlier, while China's rose 35%. In South Korea, semiconductor exports surged 259.4%, driving the overall increase in exports.
The concern is that global trade as a whole could become vulnerable to the course of future U.S. investment in data centers.
Capital Economics recently estimated that up to 80% of the increase in global exports is concentrated in AI-related goods. It warned that if the AI investment cycle slows, countries dependent on exports of related products could be hit significantly.
It added that major exporters such as South Korea and China are also facing weak consumer spending, so a decline in exports could deal a severe blow to economic growth.
These concerns are also being reflected in financial markets.
Alongside concerns that Congress could put the brakes on data-center development after Democrats scored a landslide victory in recent U.S. midterm elections, espionage allegations surrounding Nvidia have increased volatility in global stock markets. South Korea's KOSPI index has also fallen about 42% from its recent high.
A similar shock occurred during the collapse of the dot-com bubble.


According to UK economic analysis firm Oxford Economics, the share of U.S. GDP accounted for by imports of IT-related equipment fell 55% over the two years after peaking in mid-2000. The decline in U.S. imports also hurt the economies of other countries, including those in Asia, that supplied the equipment.
Global trade contracted sharply, and the global economic growth rate fell to 2% in 2001.
Gaurav Ganguly, head of international economics at Moody's Analytics, said the global economy would struggle to absorb the impact if AI-related stocks also plunged on top of oil shocks, tariffs and interest-rate hikes.
“The result would be a severe shock that could lead to a global recession,” he said.
Frederick Neumann, HSBC's chief Asia economist in Hong Kong, also said, “If the AI boom collapses, there will be little that can be done to prevent a global recession.”

[email protected] Lee Seok-woo, International Affairs Correspondent Reporter