LIVE MARKETS-How AI is impacting world trade

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HOW AI IS IMPACTING WORLD TRADE

It seems like there isn't really a corner of the market or global economy left untouched by AI, and most of that has been discussed in length. But here's one that maybe hasn't gotten quite as much attention: global trade.

Perhaps we should be keeping a closer eye though, because according to Simon MacAdam, deputy chief global economist at Capital Economics, "world trade is going gangbusters," and the AI buildout is a key driver behind that.

MacAdams flags an unusually strong growth rate in global real goods exports, as well as a jump in export prices which he links to strong chip demand that has caused the price of some AI hardware to jump. He also links pick ups in both export growth and imports to economies involved in AI supply chains, adding that a big part of the higher final demand for traded goods has however come from the US.

But clouds might be forming on the horizon.

Data suggests demand growth for computing equipment is past its highs, in turn indicating that export momentum might be around its peak, MacAdams said.

"When we factor in our forecast for real IT investment in the US to level off next year and fall in 2028, we think that AI capex will turn from a major prop to a drag on world trade. US IT equipment is largely imported, so the sharp slowdown that we expect in US capex is consistent with its 1.5%-point boost to world export growth going into reverse."

(Sophie Kiderlin)

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