The International Monetary Fund (IMF) says Artificial Intelligence (AI) could significantly transform productivity, investment, labour markets and economic policy, while creating both opportunities and risks for workers, businesses and countries
The IMF said this in its 2026 Annual Report, entitled “Navigating a Precarious World”, released on Wednesday
The report said private-sector investment in AI could exceed two trillion dollars globally in 2026, according to some external estimates, making it one of the fastest-growing drivers of growth in recent years
According to the report, technology investments related to AI added an estimated 05 percentage point to United States’ Gross Domestic Product (GDP) growth in 2025.
It said productivity growth in the US. had also accelerated over the past several years, which might partly reflect the early impact of AI adoption.
It further said as global spending shifted toward deploying AI across sectors, AI-driven productivity gains could accelerate across a broad range of industries and occupations
The IMF noted that Asia was actively pursuing AI opportunities, with Singapore ranking at the top of its AI Preparedness Index
It attributed Singapore’s position to its strong digital infrastructure, education and forward-looking regulation
“East Asia is a hub for chip manufacturing and design, while South-East Asia is building on its strength in manufacturing to move up the value chain as well”
However, the IMF warned that the rapid adoption of AI could create significant labour-market disruptions
It said policymakers, households and businesses were increasingly concerned about how AI would transform labour markets, including the possibility of job displacement and wage declines for some categories of workers
According to the report, IMF research showed that workers in jobs requiring AI-related skills earned more, but cities and regions with greater concentrations of such jobs were not experiencing overall job growth
It said workers with AI skills were benefiting, as were people in low-skill roles, such as restaurant staff members, who provided services to higher earners
“Left out are middle-skilled workers whose jobs are highly exposed to automation”
The IMF also warned of risks to businesses arising from heavy investment in AI, particularly where such investments were increasingly debt-financed
It said the returns from expensive AI investments could prove illusory, potentially leading to sharp reversals in equity valuations, wealth destruction and layoffs
Within the AI ecosystem, including hyperscalers building data centres and chipmakers, the IMF said circular financing arrangements could heighten systemic risks
It explained that such arrangements occurred when a small group of firms simultaneously acted as one another’s customers, investors and financiers
According to the report, this could increase the risk of problems in one firm cascading to others
The IMF said its Executive Board was regularly monitoring such risks through multilateral surveillance
It added that the fund was helping member countries navigate the rapidly evolving AI landscape through a suite of indexes covering national preparedness, skill readiness and skill imbalance
The indexes, it said, helped countries understand their strengths and weaknesses in areas such as workforce training, digital infrastructure, venture capital and regulation
The report said the indexes formed part of the IMF’s analysis of macro-critical issues relating to AI, including its impact on productivity and growth, labour markets and skills, inequality, financial markets, energy and climate
The fund said it was also helping countries draw lessons from those leading in AI-related policies and adapt them to their own circumstances
It said this enabled the IMF to provide tailored advice on structural policies, including how to help workers navigate AI-driven transitions and assess the technology’s potential implications for growth and inflation and monetary and fiscal policymaking
The IMF said it was also helping member countries guard against economic, financial stability and fiscal risks that could arise from an AI investment bust, particularly where public debt was already high
The fund said countries would need to guard against the risks associated with AI while continuing to pursue the potential benefits of the technology
The News Agency of Nigeria (NAN) reports that beyond AI, the report identified rising public debt, trade reorientation and digital currencies as other major forces shaping the global economy (NAN)