Are We Entering a New Economic Cycle Driven by Technology and Energy?

By Wael Rashed | Business Development Director & Official Spokesperson at Evest

Wael Rashed noted that, for decades, global economic cycles were largely understood through familiar forces: interest rates, consumer demand, credit conditions and the traditional fluctuations of energy prices.

Today, however, a different structure appears to be emerging.

The global economy is increasingly being shaped by two powerful forces at the same time: an unprecedented technology investment cycle driven by artificial intelligence, and a renewed strategic importance of energy.

According to Rashed, this combination may be creating something more significant than another phase of the traditional business cycle. We may be witnessing the early stages of a new economic model in which technology determines the speed of growth, while energy determines its cost.

That distinction matters for investors, businesses and policymakers alike.

Technology Is Becoming a Macroeconomic Force

Rashed explained that artificial intelligence is no longer simply a technology-sector story.

What began as excitement around software, semiconductors and large technology companies is increasingly translating into massive physical investment.

AI requires data centres. Data centres require semiconductors, electricity grids, cooling infrastructure, land, construction and enormous amounts of capital.

In other words, the digital economy is becoming increasingly physical.

Rashed also pointed to the International Monetary Fund, which has highlighted the technology-driven investment boom as one of the major forces supporting the global economy in 2026, particularly in economies deeply integrated into the global technology value chain.

This is important because major investment cycles can have effects far beyond the companies directly involved.

They create demand for labour, raw materials, infrastructure, financing and energy. They can raise productivity over time, but they can also push investment, asset prices and capital spending sharply higher before the full productivity benefits are realised.

AI therefore has the potential to become not only a corporate story, but a genuine macroeconomic driver.

The Hidden Constraint: Energy

As Rashed noted, there is one resource the digital economy cannot virtualise: electricity.

The International Energy Agency expects global electricity consumption from data centres to more than double by 2030, reaching roughly 945 terawatt-hours, with AI representing the most important driver of that increase.

That is where the technology story begins to merge with the energy story.

According to Rashed, the next phase of AI development will not depend only on who develops the best models or the fastest chips. It may increasingly depend on which economies can provide reliable, affordable and scalable electricity.

This creates a major shift in the global investment landscape.

Energy infrastructure, electricity grids, natural gas, renewables and nuclear generation could become strategically linked to the expansion of the technology sector.

The AI race, therefore, may also become an energy race.

A New Inflation Equation

Rashed described this as an interesting economic contradiction.

Technology is normally considered deflationary.

Automation can lower costs, improve efficiency and increase productivity. If AI delivers on its potential, it could eventually allow economies to produce more with fewer resources.

But getting there requires extraordinary levels of investment first.

Data centres must be built. Electricity networks must be upgraded. Semiconductor capacity must expand. Governments and companies must invest heavily in infrastructure.

That investment can generate additional demand before the productivity gains appear.

At the same time, geopolitical tensions continue to remind markets that energy supply remains vulnerable to shocks.

Rashed noted that the IMF's July 2026 outlook described the global economy as being influenced by a technology-driven investment boom supporting activity while energy-related pressures and geopolitical uncertainty continue to weigh on growth and inflation.

This could create a very different inflation environment from the one investors became accustomed to before the pandemic.

Instead of inflation being driven mainly by excessive consumer demand, future inflation pressures may increasingly emerge from investment, infrastructure bottlenecks, energy availability and geopolitical fragmentation.

What Does This Mean for Interest Rates?

Rashed argued that if technology investment remains exceptionally strong while energy and infrastructure constraints persist, central banks may face a more complicated environment.

Strong investment can support economic growth even when monetary policy is restrictive.

At the same time, energy shocks can push inflation higher while weakening consumer purchasing power.

This combination makes monetary policy much harder to manage.

Central banks could find themselves in situations where growth remains relatively resilient but inflation falls more slowly than expected.

According to Rashed, it may therefore become increasingly difficult for markets to assume that every economic slowdown will automatically lead back to ultra-low interest rates.

Technology itself could even influence the so-called neutral rate of interest if sustained investment creates structurally stronger demand for capital.

The result could be a world where investment remains strong, capital becomes more valuable and interest rates settle above the exceptionally low levels that characterised much of the post-2008 period.

Winners and Losers Will Not Be Defined by Sector Alone

For investors, Rashed said, perhaps the most important consequence is that traditional sector classifications may become less useful.

Technology companies will increasingly depend on energy companies.

Energy producers will increasingly depend on electricity demand from technology infrastructure.

Industrial companies will benefit from grid expansion and infrastructure spending.

Semiconductor companies will depend on both technological demand and physical energy capacity.

Even governments may compete not only through tax incentives or regulation, but through access to power, infrastructure and strategic resources.

Rashed noted that countries with abundant energy, deep capital markets, strong technology ecosystems and modern infrastructure could gain a significant competitive advantage.

This has particular relevance for regions such as the Middle East.

Historically associated with energy exports, several Gulf economies are simultaneously investing heavily in artificial intelligence, data infrastructure, renewable energy and advanced industries.

If technology and energy become increasingly interconnected, economies capable of combining both could occupy a strategically important position in the next global growth cycle.

The New Economic Question

According to Rashed, the defining investment debate of the next decade may therefore move beyond the traditional question of whether technology will outperform energy.

The more important question may be how the two interact.

Technology needs energy.

Energy increasingly needs technology.

And both require unprecedented amounts of capital.

For markets, Rashed explained, this means the next economic cycle could look very different from the previous one.

The winners may not simply be the companies with the most innovative technologies or the countries with the largest energy reserves.

They may be those capable of connecting capital, technology, infrastructure and energy into one productive ecosystem.

Rashed concluded that if that transformation continues, we may eventually look back at this period not simply as the beginning of the AI revolution, but as the point when technology and energy together began reshaping the architecture of the global economy.

And for investors, understanding that connection may prove far more important than predicting the next short-term move in interest rates or equity markets.

Selected Sources

• International Monetary Fund (IMF), World Economic Outlook Update, July 2026.

• International Monetary Fund (IMF), World Economic Outlook Press Briefing, July 8, 2026.

• International Energy Agency (IEA), Energy and AI: Energy Demand from AI.

• International Energy Agency (IEA), Energy and AI: Energy Supply for AI.