IMF says AI investment keeps global growth around 3% but brings massive disruption

IMF head Kristalina Georgieva announced on Monday that strong investment in AI infrastructure is maintaining global growth at approximately 3%, offering significant advantages for Asia, but also hints at a "slow-moving tsunami" that could disrupt labor markets, taxation, and education. The AI investment boom is already generating a "demand shock, an investment shock" that could enhance growth in advanced Asian economies by a half to one percentage point, and in emerging Asian economies by 0.2 to 0.8 percentage point, she stated.

IMF Managing Director Kristalina Georgieva emphasized that "AI, love it, hate it. It's already here," and added, "That shift into higher gear is what is keeping the world economy growing at around 3%, despite the fact we are being dragged down by the energy supply shock."

Georgieva shared that IMF research indicates roughly 40% of jobs will either be augmented, downgraded, or eliminated by AI, with up to 60% in advanced economies. This development could have profound implications for employment, economic growth, education, and even taxation, due to the anticipated shift from labor-intensive to capital-intensive work.

An initial study revealed that 10% of jobs in the US already necessitate AI skills. While routine, repetitive jobs are diminishing, low-paying jobs are expanding in sectors such as construction and data centers.

The US, China, and India are the leading producers in the AI supply chain, but many hardware providers for the required infrastructure are located in Asia, Georgieva noted, mentioning Thailand as the host of this year's annual meetings. During the same event, Singapore's President Tharman Shanmugaratnam highlighted the need to address how AI is diminishing job opportunities for graduates, stating that the first job upon graduation now faces less demand.

He urged the world to prevent AI from causing a "new divergence" in growth and job creation between developing and advanced economies, warning that AI could exacerbate income disparities if left unaddressed.

World Bank President Ajay Banga countered this concern by expressing doubt that entry-level jobs would be destroyed by AI. Instead, he suggested that much of the disruption would occur in advanced economies that are constructing large AI models. According to Banga, the World Bank focuses on leveraging "small AI" to deliver productivity gains for farmers, health clinics, and teachers, rather than investing in large language models.