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 0.5 percentage point to United States’ Gross Domestic Product (GDP) growth in 2025.
It said productivity growth in the U.S. 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)
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