Gita Gopinath, former deputy director of the IMF, warns of a potential financial explosion. Driven by the euphoria around artificial intelligence, the current rally in the American markets could, according to her, precipitate a global correction of unprecedented violence. The result is up to $35,000 billion in losses on global assets.
In brief
- Gita Gopinath, former deputy director of the IMF, warns of a risk of an unprecedented global financial crash.
- According to her, the current stock market rally, strongly fueled by AI, is disconnected from economic fundamentals.
- A market collapse could cause up to $35 trillion in losses globally.
- Households and institutional investors would all be exposed, with direct impacts on the real economy.
A crash of 35,000 billion? The numerical warning from an IMF figure
As Trump's tariffs have wreaked havoc on the crypto market, Gita Gopinath, former chief economist and ex-deputy managing director of the IMF, is sounding the alarm.
According to her, the meteoric growth of the American markets is out of step with real economic fundamentals. This rebound is largely fueled by enthusiasm around emerging technologies, notably artificial intelligence.
However, this dynamic could quickly reverse. “There is good reason to fear that the current rally is setting the stage for another painful market correction“, warns-She. In his eyes, the growing interconnection of economies and the overexposure of major global players make global contagion inevitable.
The economist puts forward a numerical estimate of the potential damage in the event of a crash, and it is far from trivial:
- 20,000 billion dollars in losses for the American economy, or approximately 3.5% of national GDP;
- $15 trillion in losses for international investors, equivalent to nearly 20% of global GDP excluding the United States;
- A global impact estimated at $35 trillion, with cascading effects across the entire financial system.
Gopinath draws a direct analogy with the dot-com bubble of the 2000s, while highlighting major structural differences: “a crash today would probably not cause as brief and relatively benign a downturn as the one that followed the dotcom bubble burst“, she warns.
According to her, systemic vulnerabilities are more serious today, due to macroeconomic fragility and the increased complexity of global financial markets.
When the AI bubble threatens the real economy
Beyond the immediate threat to financial markets, Gita Gopinath emphasizes how the craze for AI is profoundly distorting the structure of valuations. Indeed, JPMorgan precise that companies heavily exposed to artificial intelligence now represent 44% of the total capitalization of the S&P 500, compared to only 22% in 2022.
This rapid evolution has allowed American households to gain nearly $5,000 billion in net wealth in recent years, an increase that is largely based on the artificial growth of these technology stocks. “AI boom could mask slowdown in traditional U.S. economy», Warns the former deputy director of the IMF.
This imbalance poses a risk of direct transmission to the real economy. A sudden reversal would hit institutional investors, but also households, increasingly exposed through their stock market portfolios, their pensions and their insurance.
Furthermore, the effects of such a crash would reverberate across strategic sectors such as energy, semiconductors or cloud infrastructures, which fuel the AI ecosystem. The damage would therefore not be limited to technology stocks themselves, but could cause a broader recession, also affecting supply chains and job markets.
In this context of growing uncertainty, some investors may turn again to bitcoin, perceived by part of the market as an alternative reservoir of value. Although extremely volatile, the asset has historically stood out for its resilience in the face of inflationary monetary policies and the flaws of the traditional banking system.
Even if the scenario of a collapse is not certain, several experts are calling for portfolio diversification and particular attention to excessive valuations. Some are talking about the return of safe haven assets like gold, whose recent performance reflects a rise in concerns on the markets. In any case, excessive dependence on a single theme, even technological, exposes the global economy to turbulence of a systemic scale.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
