February 24, 2024

IMF Chief Warns of Risks and Opportunities of Artificial Intelligence for Global Economy

In a recent interview, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, emphasized that artificial intelligence (AI) holds both risks and opportunities for the global economy. While AI has the potential to boost productivity and fuel economic growth, it also poses a threat to job security worldwide.

According to Georgieva, AI is expected to impact around 60 percent of jobs in advanced economies. However, its effects are predicted to be less significant in developing countries, with around 40 percent of jobs globally likely to be impacted. The impact of AI is expected to be higher on higher-skilled jobs.

Nevertheless, the IMF’s report highlights that only half of the jobs impacted by AI will be negatively affected. In fact, the rest may actually benefit from increased productivity due to AI integration. Georgieva believes that individuals may see their jobs disappear due to AI, but it also has the potential to enhance job roles, making workers more productive and potentially increasing their income levels.

The IMF report further suggests that while emerging markets and developing economies may experience a smaller initial impact from AI, they are less likely to benefit from the productivity gains that AI can bring to the workplace. Georgieva emphasized the need to support low-income countries in harnessing the opportunities presented by AI.

Despite the potential risks, Georgieva sees AI as a tremendous opportunity for everyone. She stated that although AI can be intimidating, it holds immense potential for economic growth. The IMF is set to publish updated economic forecasts later this month, which are expected to show that the global economy is on track to meet previous projections.

Georgieva acknowledged that the world economy could benefit from a productivity boost facilitated by AI. The IMF predicts that the global economy will continue growing at historically muted levels in the medium term. Unlocking productivity is crucial to ensure a positive economic outcome.

Looking ahead, Georgieva mentioned that 2024 is likely to be a challenging year for fiscal policy worldwide. Countries will face the task of tackling debt burdens accumulated during the COVID-19 pandemic. Additionally, a significant number of countries are scheduled to hold elections this year, placing additional pressure on governments to either increase spending or reduce taxes to gain popular support.

An area of concern for the IMF is the potential expansion of government spending, which could undermine progress made in combating high inflation. If monetary policy tightens while fiscal policy expands, it may lead to a prolonged and challenging economic situation.

Regarding her future at the IMF, Georgieva declined to comment on whether she intends to run for a second term. She emphasized that her focus is on the current job at hand and expressed pride in how the institution coped during turbulent times.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it