IMF chief warns of threat from AI to jobs and taxes

The head of the International Monetary Fund (IMF), Kristalina Georgieva, has warned that artificial intelligence (AI) poses a significant threat to the labor market and taxation. In her opening remarks at the IMF and World Bank annual meetings in Bangkok, Georgieva described AI as a "slow-moving tsunami" that is already displacing many workers by automating routine tasks.

While AI has created low-wage jobs in sectors like construction, Georgieva cautioned that this is not a cause for celebration. She emphasized that the transformation brought about by AI will have profound implications for public finances. Georgieva explained that AI is likely to shift the economy towards capital, reducing the reliance on labor, which has traditionally been the primary source of tax revenue.

The IMF chief highlighted that young workers in AI-exposed fields have already experienced a slowdown in hiring, leaving them more vulnerable to job loss. There is growing concern that AI could exacerbate inequality, as its benefits have been concentrated among a select few, despite a global investment super-cycle.

Georgieva stressed that society needs to carefully assess the impact of AI on employment and draw lessons from the current situation. Despite the challenges it poses, she acknowledged that AI can ultimately boost economic growth. The IMF estimates that the adoption of AI could add up to a percentage point to growth in advanced Asian economies, which is a significant advantage compared to the aging populations in rich countries across the region.