IMF Chief: AI threatens jobs, but offers ‘tremendous opportunity’ for growth

Washington DC: The rise of artificial intelligence (AI) poses a significant risk to job security around the world, but it also offers a “golden opportunity” to revitalise flagging productivity and fuel global economic growth, IMF chief Kristalina Georgieva warned in an interview with AFP.

Speaking shortly before heading to the annual World Economic Forum in Davos, Georgieva revealed that AI is estimated to impact a staggering 60 per cent of jobs in advanced economies, with around 40 per cent globally facing potential disruption. She emphasised that jobs requiring higher skillsets are likely to be disproportionately affected.

However, the IMF’s recent report paints a nuanced picture. While acknowledging the threat of job displacement, it also highlights the positive potential of AI. Up to half of the impacted jobs may actually benefit from increased productivity enabled by AI, potentially leading to higher incomes and improved job satisfaction.

Georgieva stressed the need for proactive measures, especially in developing economies, to harness the opportunities AI presents. “We must bridge the gap and equip low-income countries to seize the potential of AI,” she urged.

Despite the challenges, Georgieva ultimately sees AI as a force for good: “Yes, it’s a bit scary, but it’s also a tremendous opportunity for everyone.”

On a separate note, Georgieva offered encouraging news about the global economy. The IMF is set to release updated forecasts later this month, indicating that the world economy remains largely on track to meet previous growth projections. She described the current trajectory as a “soft landing,” with monetary policy stabilising and inflation gradually declining.

However, navigating the delicate balance between tightening monetary policy and maintaining fiscal discipline will be crucial. “The job is not quite done,” Georgieva cautioned. “We need to avoid the pitfall of easing monetary policy too quickly or too slowly.”

An AI-driven productivity boost would be a welcome shot in the arm for the global economy, currently projected to experience continued subdued growth in the medium term. “God, how much we need it,” Georgieva exclaimed. “Without unlocking productivity, our global outlook wouldn’t be very promising.”

Looking ahead to 2024, Georgieva predicts a “very tough year” for fiscal policy worldwide. Governments will grapple with managing debt burdens accumulated during the pandemic and replenishing depleted fiscal buffers. Additionally, the year is packed with elections, further amplifying pressure on governments to increase spending or cut taxes. The IMF’s primary concern, Georgieva explained, is that excessive fiscal expansion by governments could jeopardise the hard-won progress in bringing down inflation. “If monetary policy tightens while fiscal policy loosens, pushing against the goal of lowering inflation, we could be in for a prolonged struggle,” she warned.

Finally, when asked about her potential re-election as IMF chief, Georgieva politely declined to comment. “My focus right now is on fulfilling my current role,” she stated. “It has been a tremendous privilege to lead the IMF through these turbulent times, and I’m proud of how the institution has responded.”