IMF's Georgieva says AI investment keeps global growth near 3%, helping Asian suppliers

Centre · 2IMF managing director Kristalina Georgieva said on 12 October that strong investment in AI infrastructure is keeping global growth at around 3 per cent, with major benefits for Asian economies that supply the hardware, such as Thailand. 1 2 Centre · 1She described the AI investment boom as a "demand shock, an investment shock" that could raise growth in advanced Asian economies by a half to one full percentage point, and in emerging Asian economies by 0.2 to 0.8 percentage point. 1 Centre · 1Georgieva said this "shift into higher gear" is keeping the world economy growing at around 3 per cent despite the world being dragged down by the energy supply shock; she spoke at the opening of the IMF and World Bank annual meetings in Bangkok. 1

Centre · 1The IMF forecast global growth of 3 per cent for 2026 in July and will publish an updated outlook on Tuesday, according to Reuters. 2 Centre · 1About 18,000 people are expected at the week-long meetings, including finance officials from the IMF's 191 members; sources told Reuters that several ministers, including US Treasury Secretary Scott Bessent and Spanish Finance Minister Arcadi Espana, will skip it to focus on domestic priorities. 2 Centre · 1Georgieva called AI a "slow-moving tsunami" with profound consequences for jobs, growth, education and government tax revenue, given an expected shift from labour to capital. 2

Centre · 1She said the IMF estimates AI could over time augment, downgrade or eliminate 40 per cent of jobs, and an initial study showed 10 per cent of US jobs already require AI skills; routine jobs are shrinking while low-paying jobs are growing in construction and data centres. 2 Right · 1In a Bloomberg report carried by The Straits Times, Georgieva said at a session on AI and employment, during her first appearance at the Bangkok meetings, that AI is already hollowing out demand for routine work, and that the rise in low-paying construction jobs is "not a story to celebrate". 3 Right · 1She warned that AI could strain government revenues by tilting the economy towards capital and away from labour, urged policymakers to rethink education and act now, and said the growth boost to advanced Asian economies "is a very big deal" that would "more than offset" the drag from ageing in rich countries across the region. 3

Centre · 1Georgieva said the US, China and India are the most important producers in the AI supply chain, but many firms building the needed infrastructure are in Asia. 2 Centre · 1World Bank President Ajay Banga said the bank is focused on "small AI", not reliant on large language models, to raise productivity for farmers, health systems and educators in emerging markets. 2 Centre · 1Singapore's President Tharman Shanmugaratnam said governments should address falling demand for graduates' first jobs and warned AI could widen the divergence between developing and advanced economies if countries are too passive. 2