Singapore central bank warns risks if AI investment slows

In short: Singapore’s central bank says the world economy could take a hit if today’s surge in AI spending slows down, and it also warned that newer AI tools may increase cyber crime risks.

What happened

Singapore’s central bank, the Monetary Authority of Singapore (MAS), said global growth is now closely linked to industries that support AI, especially computer chips and data centres (large buildings filled with computers that run online services).

MAS managing director Chia Der Jiun warned that if companies pull back sharply on AI investment, it could reduce business spending and demand for semiconductors, which are the tiny parts inside electronics that make them work. He also said it could trigger a “sharp tightening” in global financial conditions, meaning borrowing could get more expensive and markets could become more nervous.

The warning came as shares of major chipmakers in Asia fell, as investors questioned how long the AI spending boom will last. MAS added that even if AI investment pays off through higher productivity, it could still push up inflation and energy demand.

MAS also highlighted cyber security risks. It said criminals are using AI to make phishing messages more convincing and to create deepfakes, which are realistic fake audio or video used to impersonate someone (like a forged voice on a phone call). MAS said hackers may also use advanced AI to find weak spots in banks’ systems, and it announced a task force to help financial firms strengthen their defences.

Why it matters

Singapore is a trade-heavy economy, and MAS said more than 70 percent of Asia’s export growth this year is tied to AI-driven electronics. If AI spending slows, it could affect jobs, investment, and prices, and it could also raise the risk of scams that target everyday people.

Source: Financial Times