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IMF chief says AI holds risks but also ‘tremendous opportunity’ for global economy

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Artificial intelligence poses risks to job security across the world but also offers a ‘tremendous opportunity’ to boost flagging productivity levels and fuel global growth, the International Monetary Fund chief said.

International Monetary Fund managing director Kristalina Georgieva. File picture: AFP

ARTIFICIAL intelligence poses risks to job security across the world but also offers a “tremendous opportunity” to boost flagging productivity levels and fuel global growth, the International Monetary Fund (IMF) managing director said on Monday

AI would affect 60% of jobs in advanced economies, Kristalina Georgieva said in an interview in Washington, shortly before departing for the annual World Economic Forum in Davos, Switzerland.

With AI expected to have less effect in developing countries, around “40% of jobs globally are likely to be impacted”, she said, citing a new IMF report.

“And the more you have higher skilled jobs, the higher the impact,” she added.

However, the IMF report, published on Sunday evening, notes that only half of the jobs impacted by AI will be negatively affected; the rest may benefit from enhanced productivity gains due to AI.

“Your job may disappear altogether – not good – or artificial intelligence may enhance your job, so you actually will be more productive and your income level may go up,” Georgieva said.

UNEVEN EFFECTS

The IMF report predicted that while labour markets in emerging markets and developing economies would see a smaller initial impact from AI, they were less likely to benefit from the enhanced productivity that would arise through its integration in the workplace.

“We must focus on helping low income countries in particular to move faster to be able to catch the opportunities that artificial intelligence will present,” Georgieva said.

“So, artificial intelligence, yes, a little scary. But it is also a tremendous opportunity for everyone,” she said.

The IMF was due to publish updated economic forecasts later this month, which would show the global economy was broadly on track to meet its previous forecasts, she said.

It was “poised for a soft landing”, she said, adding that “monetary policy is doing a good job, inflation is going down, but the job is not quite done”.

“We are in this trickiest place of not easing too fast or too slow,” she said.

The global economy could use an AI-related productivity boost, as the IMF predicted it would continue growing at historically muted levels over the medium term.

“God, how much we need it,” Georgieva said. “Unless we figure out a way to unlock productivity, we, as the world, are not for a great story.”

‘TOUGH’ YEAR AHEAD

Georgieva said 2024 would probably be “a very tough year” for fiscal policy worldwide, as countries looked to tackle debt burdens accumulated during the Covid-19 pandemic, and rebuild depleted buffers.

Billions of people were also due to go to the polls this year, putting additional pressure on governments to either raise spending or cut taxes to win popular support.

“About 80 countries are going to have elections, and we know what happens with pressure on spending during election cycles.”

The concern at the IMF, Georgieva said, was that governments across the world spent big this year and undermined the hard-won progress they had made in the fight against high inflation.

“If monetary policy tightens and fiscal policy expands, going against the objective of bringing inflation down, we might be for a longer ride.”

CONCENTRATING ON THE JOB

Georgieva, whose five-year term at the IMF’s helm is set to end this year, refused to be drawn on whether she intends to run for a second stint leading the international financial institution.

“I have a job to do right now and my concentration is on doing that job,” she said.

“It has been a tremendous privilege to be the head of the IMF during a very turbulent time, and I can tell you I’m quite proud of how the institution coped.

“But let me do what is in front of me right now.”

– AFP

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