Taiwan's economy expanded almost 14% last quarter as global chip demand surged, and South Korea's exports jumped nearly 50% in April on a wave of chip shipments. At the same time, a sharp energy shock from conflict in the Middle East is raising costs and squeezing other regions, creating opposing pressures on trade, investment and inflation.

Global growth is being pulled two ways. One force is the rush of investment into artificial intelligence. The other is a sharp energy shock from conflict in the Middle East. Together, they're changing trade flows and the mix of winners and losers among economies.

Where the AI boom is showing up

High-tech exporters are seeing the clearest gains. Taiwan recorded almost 14% growth last quarter, the fastest pace since the late 1980s. South Korea logged export growth near 50% in April, for a second straight month. Chip shipments to markets that run large AI models soared, with chip exports up 173% year on year.

Those numbers point to heavy demand for semiconductor supply chains. They also reflect big investment by cloud and software firms. Chipmakers and data-centre operators are scaling fast. Investors rewarded that. Two major technology firms reached market values above $4 trillion as the AI story drew capital and bidding from global markets.

The World Economic Forum has documented this shift. It shows AI moving past hype into production. AI is cutting costs in content-heavy industries and lifting sales efficiency.

One WEF analysis found AI-driven processes could cut content production costs by about 60% and lift conversion rates by up to 20% in consumer industries.

AI is also altering energy needs. Data centres already accounted for roughly 1% of global electricity demand in 2022. WEF work estimates that share could rise to over 3% by 2030 as compute demand expands. At the same time, the Forum points out that AI tools can help companies lower energy use by large amounts in specific functions.

How the energy shock is cutting the other way

Not every economy benefits from the AI surge. The Iran war has pushed energy prices and disrupted supply in ways that act like a brake. That shock raises costs for manufacturers and households. It also changes import bills and balances of trade for energy importers.

Higher energy prices feed through to inflation. Central banks watch that closely. When energy costs jump, consumers spend less on other goods. Companies delay investment that depends on predictable power and transport costs. Those effects blunt the expansion seen in chip-driven exports.

Mastheads

The energy shock also shifts political and economic risk assessments. The World Economic Forum's Global Risks Report found state-based armed conflict ranked as the top risk for 2025. This report said chief risk officers were pessimistic about the near-term outlook, pointing to conflict, misinformation and extreme weather as top concerns.

Trade maps and tariffs add another twist

Trade policy has been changing at the same time. New US tariffs and regional policy moves are redrawing some trade routes. That adds complexity to the picture. Firms that had planned long global supply chains are now weighing tariff costs and security of supply.

The combination of tariffs, an energy shock and shifting demand for chips means investment is re‑directed. Some firms are accelerating local capacity in chip hubs. Others are building redundancy into supply chains. That costs money. It changes where growth shows up.

Who wins, who loses

Export-reliant economies with advanced chip manufacturing have gained so far. The rise in chip shipments has pushed headline growth and export figures in places like Taiwan and South Korea. Those economies are capturing demand from cloud providers and AI developers.

By contrast, countries that rely on energy imports or have manufacturing concentrated in energy-intensive sectors face a tougher trade-off. They pay more for fuel and power. They also face higher inflation and a hit to household spending. That pressure can curb domestic demand and dampen investment.

Investors, meanwhile, are focusing on firms that supply the AI stack. Semiconductor firms, data-centre builders and cloud operators have seen strong capital inflows. That has pushed valuations and created room for more spending on chips, servers and software.

Gross domestic product remains the main way to track these shifts. GDP measures the total value of goods and services produced in a country. It has been the standard metric since it was proposed in 1937. GDP growth captures the headline gains driven by rising exports and high-tech investment. It also registers the drag from higher energy costs and disrupted trade.

But GDP alone leaves out some shifts that matter. The World Economic Forum and other organisations are emphasising new indicators to capture wellbeing, resilience and sustainability. Those measures aim to show how gains from AI are distributed and how energy shocks erode living standards in different places.

Policymakers face hard choices. They need to keep energy markets functioning while allowing investment in new technology to proceed. That means balancing short-term price effects against longer-term gains from electrification and smarter energy use.

Central banks must weigh stronger output in chip hubs against price pressures from higher fuel costs. Fiscal authorities may need to protect vulnerable households while supporting strategic industries. Some governments are already moving to bolster domestic semiconductor capacity and to shield critical infrastructure from supply disruptions.

Markets are reacting fast. Capital has flowed into firms tied to AI. At the same time, higher energy prices have pushed money into commodities and into companies that produce or trade energy. That mix is widening valuation gaps between sectors.

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Chip shipments to AI-heavy markets rose 173% year on year, amplifying growth in chip hubs while energy importers lag.

This article was created with AI assistance.