Artificial intelligence could boost productivity while displacing jobs in emerging market economies with significant exposure to the IT services and BPO sectors, but the impact is not yet clearly visible in India, Moody’s Ratings said on Thursday.

In its Global Emerging Markets outlook 2027 report, Moody’s said for most emerging markets, inadequate access to computing capacity, digital infrastructure and skills could increasingly determine their ability to capture AI-related gains.

Moody’s expects GDP growth for the largest EMs in 2027 to be largely similar to that in 2026, with some potential upside depending on a potential easing of the Middle East conflict. Moody’s has already raised its projections for India’s FY’27 GDP growth to 75, from 6.5% earlier.

It said continued commodity demand will remain a key growth driver for some metal and energy producers, although overall growth will be slow and vary considerably by country.

Resilient consumer spending, where underpinned by supportive policies, and foreign direct investment (FDI), where significant, will also support growth for a number of emerging markets.

”For EMs with significant levels of software or IT and business-process outsourcing exposures, AI could both raise productivity and create displacement risks. But even for India and the Philippines — the potentially most-exposed EM countries — there is no current clear illustration of either trend,” Moody’s said.

Moody’s said most EM sovereigns will stabilise their debt, offsetting the increase in interest rates, through contained spending, revenue raising measures or both.

”The fiscal space for policy responses to further shocks, such as the potential impact of a record El Nino, may however be constrained due to rigid spending structures.

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