IMF Forecasts Stable 3% Global Growth Amid Modern Industrial Disruption
Strong investment in AI infrastructure is keeping global growth at around 3% with major benefits for Asia, but also foreshadows a “slow-moving tsunami” that could massively disrupt labor markets, taxation and education,
International Monetary Fund Managing Director Kristalina Georgieva said on Monday.The artificial intelligence investment boom was already delivering a “demand shock, an investment shock” that could boost growth in advanced Asian economies by a half to one full percentage point, and emerging Asian economies by 0.2 to 0.8 percentage point, she said.
“AI, love it, hate it. It’s already here,” Georgieva said.
“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,” she told hundreds of participants on the first day of a weeklong set of meetings of the IMF and World Bank in the Thai capital.
The IMF in July forecast global growth at 3% in 2026. It will release an updated outlook on Tuesday.
Some 18,000 people are expected to attend the gathering this week, including finance officials from the IMF’s 191 members. However, several finance ministers will skip the trip to focus on domestic priorities, including US Treasury Secretary Scott Bessent and Spanish Finance Minister Arcadi España.
Also absent will be the finance ministers from Canada, India and the Democratic Republic of Congo, which is struggling to contain an Ebola outbreak that has killed at least 4,000 people, said a source familiar with the plans.
Saudi Finance Minister Mohammed Al-Jadaan, who heads the IMF’s steering committee, still planned to attend despite an operations halt at the Riyadh airport following deadly weekend attacks by Yemen’s Iran-aligned Houthis, two sources said.
Asked about the negative impact of AI on jobs, Georgieva said that IMF research shows that some 40% of jobs will be either augmented, downgraded or eliminated by AI, and as high as 60% in advanced economies.
This will have profound consequences for jobs, growth, education and even how governments generate revenue through taxation, given the expected shift from labor to capital.
An initial study showed that 10% of jobs in the US already required AI skills. While routine, repetitive jobs were shrinking, low-paying jobs were increasing in two lower-paying sectors, construction and data centers.
“It is a transformative technology. It so completely changes how we work, how we live,” she said, noting that an AI assistant now gave her a 30-second message about her schedule each morning.
The US, China and India are the most important producers in the AI supply chain, but many of the firms supplying hardware for the needed infrastructure are in Asia, Georgieva said, referencing Thailand, host of this year’s annual meetings.
AI IMPACT ON ENTRY-LEVEL JOBS
Singapore President Tharman Shanmugaratnam, speaking at the same event, said governments should address how AI was reducing job opportunities for graduates.
“There is a particular problem that we have to address very soon … and that is that, the first rung in employment, your first job upon graduation, is now seeing less demand,” he said.
He said the world should also guard against AI resulting in a “new divergence” in growth and job creation between developing and advanced economies.
“AI is going to widen the divergence if we are too passive about it,” he said. “So we’ve got to do everything we can to first use AI to create good jobs and to create jobs that can be done well by human beings, can allow them to ride up a career ladder despite AI.”
World Bank President Ajay Banga, who has made jobs a central focus of his presidency, told reporters that he was not convinced that entry-level jobs would be destroyed by AI, and that much of the disruption would take place in advanced economies that are building large AI models.
“In the emerging markets, we are not into large language models,” he said, adding that the World Bank was focused on leveraging “small AI” that does not require massive computing power to deliver productivity gains for farmers, health clinics and teachers.
Reporting by Andrea Shalal, David Lawder and Rae Wee; Editing by Clarence Fernandez and John Mair
This article was first reported by Reuters
