Kristalina Georgieva stresses that overconfidence in AI-driven growth could expose vulnerabilities, especially in emerging markets, emphasizing the importance of resilience amid economic uncertainties.

Both the Bank of England and Georgieva caution that if AI enthusiasm wanes, a market correction could occur, especially given slow AI adoption and rising competition.

Georgieva emphasizes that while global resilience has been tested, it remains unproven, and the shocks from overinflated AI valuations could threaten economic stability, particularly impacting emerging markets.

Market exuberance is reflected in soaring valuations, such as gold surpassing $4,000 an ounce, and a significant portion of global trade growth—over $500 billion in the first half of 2025—being driven by AI-related products, mainly from Asia to the US.

Despite tensions surrounding AI and trade, global trade continued to grow in 2025, fueled by shifts towards 'friendshoring' and bypassing US channels, with developing countries leading much of this expansion.

Georgieva warns that tariffs and trade shocks, particularly from the US and China, create vulnerabilities for developing nations already facing high tariffs, testing global resilience.

Georgieva describes the current economic environment as a 'new normal' of uncertainty, with projections of 3% GDP growth in 2025 masking underlying risks such as rising debt, geopolitical tensions, and regulatory challenges.

Analysts suggest current AI investment patterns resemble a bubble stage, with companies financing each other, raising fears of overvaluation and unsustainable growth.

Recent US-China trade tensions escalated when Trump threatened to impose 100% tariffs on Chinese goods, especially in response to Beijing's export restrictions on rare earth minerals, causing market declines.

The AI boom has led to a misleadingly optimistic economic outlook, but experts warn that this could be a bubble that might burst, leading to a significant market correction.

Top financial authorities like the Bank of England and IMF's Kristalina Georgieva are warning that the current AI market resembles the dot-com bubble, with high valuations risking a sudden correction that could have global repercussions.

She also highlights that ongoing geopolitical tensions and economic challenges make uncertainty the prevailing backdrop for global markets, complicating policy responses.

Industry leaders like Sam Altman and Jamie Dimon have expressed concerns about AI overvaluation, warning of potential sharp declines in US equities within the next year.