What FMI think about AI?

We’ve barely started this new year, but to align our goals and plans well, it’s very important to look at some forecasts. I should say, very important forecasts such as the Fonds Monétaire International (FMI).

The IMF is an international organization established in 1944, part of the United Nations system, aimed at fostering global monetary cooperation, securing financial stability, facilitating international trade, promoting high employment and sustainable economic growth, and reducing poverty around the world.

The IMF’s activities include providing economic analysis and policy advice, offering financial resources to help countries stabilize their economies, and delivering technical assistance and training to help countries improve their economic management. The organization plays a crucial role in helping member countries tackle economic challenges, such as balancing budgets, managing inflation, and addressing various forms of economic crises. The IMF also conducts economic research and publishes a wealth of reports on global economic trends, forecasts, and policy recommendations, such as the World Economic Outlook.

According FMI, Will be AI the buzzword of 2025?

To answer this and many other questions, it is time to activate our RSS feeds, check Google Trends, and look for yearly reports throughout the month of January.

It very important do it at the beginning of the year, it’s a good idea to review forecasts and reports that can help you set the stage for the months ahead.

Me, each year, a look for the follow types of forecasts and reports. You may to consider do it too:

Economic Forecasts:

Global Economic Outlook from institutions like the International Monetary Fund (IMF) or the World Bank. These provide insights into global economic trends, which can influence various sectors.
National Economic Forecasts from national banks or financial institutions, which detail predictions about GDP growth, unemployment, inflation, and other economic indicators.

Industry-Specific Reports:

Sector Analysis Reports from market research firms like Gartner, McKinsey, or specific industry consultancies. These reports offer predictions and trends within specific industries such as technology, healthcare, finance, or manufacturing.

Technology Trends:

Tech Trend Reports from firms like Forrester or Gartner. These can help you stay ahead in technology adoption, from artificial intelligence and machine learning to cybersecurity and cloud computing.

Market Forecasts:

Equity Research Reports and Market Outlooks from financial services firms. These include stock market trends, investment opportunities, and risk assessments.

Consumer Trends:

Reports from Nielsen or Euromonitor that provide insights into consumer behavior changes, spending habits, and emerging markets.

Political and Legislative Forecasts:

Reports and analyses that predict changes in political landscapes and potential new legislation that could affect various sectors and markets.

Environmental and Sustainability Trends:

Reports from environmental think tanks or agencies like the Environmental Protection Agency (EPA) or international bodies focused on climate change and sustainability practices.

Health and Wellness Trends:

Insights from health advisory and research firms that predict developments in healthcare, public health policies, wellness programs, and biotechnology advancements.

Right, you may not be interested in all of those types; thus, today, we will focus on the IMF report, exploring the expected usage of AI in the coming years. AI was the buzzword of 2024, so it’s not impossible to imagine that this subject might appear in many reports this year.

Greater wealth, fewer jobs, and a widening inequality gap between low-income and high-income countries

Cybersecurity shall be the buzzword for the rest of this decade, followed by Artificial Intelligence as a solution to mitigate low-income country crisis.

According to the latest IMF report, from now until the end of this decade, a global challenge will test many national economies in times of crisis, and only if well-invested, AI could catalyze modest growth. However, conflicts and political instabilities could unbalance global growth, leading to greater poverty and fewer jobs than ever before.

Check out my résumé of the IMF 2024 report

As we step into the future, the global economic landscape confronts a dual challenge that demands immediate attention and strategic action. Firstly, the imperative to maintain macroeconomic stability amid potential disruptions from geopolitical shocks and fiscal adjustments is critical. As inflation rates strive to realign with targets, the necessity for ongoing support remains prominent, particularly for populations still grappling with the aftermath of successive crises and low-income countries that have suffered significant setbacks.

The second challenge is leveraging the global economy’s resilience to address and adapt to transformative developments. These include climate change, the rapid pace of digitalization, and an artificial intelligence (AI) revolution that promises to redefine the workforce and the very nature of work. Such transformative times require robust multilateral cooperation to both mitigate associated risks and capitalize on emerging opportunities.

Looking ahead, the International Monetary Fund (IMF) projects a modest global growth rate of 3.1 percent by 2029. However, the forecast highlights a concerning trend: low-income countries are at risk of lagging behind, potentially missing out on the benefits of income convergence. This underscores the urgent need for rebuilding fiscal spaces to enhance economic resilience against future shocks and to facilitate necessary public investments aimed at managing both climate and technological transitions.

The drive towards greater digitalization must be comprehensive, integrating advanced technologies across all economic and financial systems to potentially redefine the international monetary system. However, the pace at which digital technology is adopted varies, with some governments lagging in harnessing these advancements to enhance public service delivery and strengthen fiscal frameworks.

Increased digitalization, though beneficial, carries its own set of risks, such as heightened susceptibility to cyberattacks, which could have systemic repercussions, including severe financial losses that may threaten corporate solvency. Consequently, it is imperative that policies and governance frameworks evolve in tandem with these technological advancements. The IMF is actively engaged in bolstering member countries’ cybersecurity measures through policy guidance and capacity-building initiatives within the Financial Sector Assessment Program.

The implications of escalating AI use are profound and far-reaching. AI not only heralds a new era of technological revolution that could significantly enhance productivity and global growth but also poses risks of job displacement and deepening economic inequalities. Current projections suggest that a substantial portion of jobs in advanced and emerging economies could be transformed by AI, emphasizing the need for proactive policy interventions to address resultant disparities.

The IMF has responded by developing an AI Preparedness Index to assess readiness across various domains such as digital infrastructure, human capital, labor market strategies, and regulatory frameworks. This tool aims to guide countries in formulating effective policies that not only harness the benefits of AI but also ensure these advantages are distributed more equitably across and within nations.

As we embrace these vast economic and technological shifts, the path forward requires a delicate balance of safeguarding economic stability while embracing transformative technological advancements. It is crucial to promote inclusive growth and ensure that the benefits of digital and AI revolutions are shared broadly to avoid exacerbating existing disparities. With strategic investments and cooperative international policies, there is potential not only to mitigate the challenges but also to harness these advancements for a more prosperous and equitable global future.

The challenge now is twofold. The first is to safeguard macroeconomic stability from further geopolitical shocks, disruptive fiscal adjustment, and the task of bringing inflation back to targets. Populations that continue to live with the legacy of successive crises will need ongoing assistance, as will those low-income countries that have experienced the strongest scarring. The second is to take advantage of global economic resilience to confront and embrace transformative developments that demand our collective action — developments such as climate change, digitalization, and an artificial intelligence revolution that, for good or ill, could reshape the nature of work. These transformations will require multilateral cooperation to mitigate risks and maximize opportunities
Global inflation is forecast to decline steadily
IMF projections, the forecast for global growth is 3.1 percent in 2029: low-income — countries face being left behind in the march toward income convergence.
The priority then must be to rebuild fiscal space to make economies more resilient to future shocks and to allow for needed public investment to manage climate and technological transitions: catalyze private financing and investment in low-carbon technologies.

IMF analysis suggests that this may cause an economic contraction of up to 20 percent in the Sahel. If the situation persists, more than 60 percent of the world’s poor will live in fragile and conflict-affected states by 2030.
The comprehensive integration of digital technologies into all aspects of economic and financial systems, processes, and policies has the potential to reshape the international monetary system. Some governments have been slow to harness digital technology to improve the delivery of public services and strengthen public finance. To maximize gains from digitalization, policymakers will need to link unconnected households to the internet and facilitate the adoption of digital solutions in the public sector.
Greater digitalization, combined with heightened geopolitical tensions, involves its own risks — for example, in the form of cyberattacks. The potential for systemic consequences has risen alongside the danger of extreme losses from cyber incidents. Such losses could potentially cause funding problems for companies and even jeopardize their solvency. Policies and governance frameworks at firms must keep pace with these rising dangers. The IMF actively helps member countries strengthen their cybersecurity frameworks through policy advice, including as part of the Financial Sector Assessment Program, and through capacity-building activities.
The potential ramifications of increasing AI usage are potentially profound. AI could herald the start of a technological revolution, which could jumpstart productivity, boost global growth, and raise incomes around the world. Simultaneously, it could also replace jobs and deepen inequality (Figure 1.4). Those who can harness AI could experience an increase in their productivity and wages, while those who cannot risk falling behind.
According to one recent IMF paper, about 60 percent of jobs in advanced economies may be affected by artificial intelligence (AI). In emerging markets and low-income countries, that figure is expected to be 40 and 26 percent, respectively. Despite the potential gains, policymakers will have to proactively address the overall inequality caused by AI. To help countries craft the right policies, the IMF has developed an AI

Preparedness Index that measures readiness in areas such as digital infrastructure, human-capital and labormarket policies, innovation, economic integration, and regulation and ethics. Wealthier economies, including advanced economies and some emerging market economies, tend to be better equipped for AI adoption than low-income countries, though there is considerable variation across countries. Ensuring that the benefits of this potential revolution are more evenly shared, not only within countries but also between regions and countries, may require a reallocation of capital and labor from less-developed regions. With sufficient investment, AI may help emerging market and developing economies leapfrog in certain sectors, facilitating
the offshoring of a broader selection of tasks and so reducing cross-country inequality.

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Will be AI the buzzword of 2025?