IMF warns of sudden correction in global stock markets

The International Monetary Fund (IMF) warned on Oct. 8, of a “risk of a sudden correction” in global stock markets, as the AI boom drives valuations toward levels reminiscent of the dot-com bubble.

Kristalina Georgieva, the IMF’s Managing Director (MD), said that market optimism about “AI’s potential to boost productivity” could “shift abruptly,” with negative repercussions for the global economy.

In a speech delivered ahead of next week’s IMF annual meetings, she noted: “Valuations today are approaching the levels we saw during the internet optimism 25 years ago.”

Her remarks came just hours after the Bank of England’s Financial Policy Committee (FPC) issued a report comparing the post-dot-com crash of 2000 with current market conditions, warning of a “sudden correction” risk in global financial markets.

The statements from the IMF’s MD and the Bank of England represent the clearest warnings yet from global officials that the AI-driven market rally could be nearing bubble territory.

Georgieva pointed out that while optimism surrounding AI has “energized” markets and helped support the global economy, any sharp correction in equity prices “could slow global growth, expose vulnerabilities, and make life much harder for developing nations.”