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Taiwan Central Bank Flags Risk of AI Boom Deepening K-Shaped Economy

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Taiwan's central bank has warned that the rapid rise of artificial intelligence could intensify economic divergence, raising concerns about a growing K-shaped economy, according to a Facebook post on Friday.

The K-shaped economy describes a split recovery, where higher-income households, often benefiting from financial markets and asset gains, move ahead while lower income groups come under rising financial pressure. US data shows that since 2023, both consumption and wealth gains have become increasingly concentrated among richer households.

For policymakers, including Taiwan's central bank, the concern is that AI-led growth and uneven wealth effects could weaken the transmission of interest rates and complicate monetary policy, making targeted measures more relevant alongside traditional tools, the central bank said.

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