Kristalina Georgieva: Artificial Intelligence Could Add Half a Percentage Point to Annual Global Growth; Kevin Warsh Predicts a Fundamental Transformation in Monetary Policy
Amid rapid transformations in the global economy, calls are growing for a balanced approach that maximizes the benefits of artificial intelligence while containing its risks. At the same time, policymakers are under increasing pressure to accelerate structural reforms, strengthen productivity, and stimulate investment as economies grapple with rising public debt, aging populations, high energy costs, and sluggish growth.
These issues featured prominently in discussions surrounding the Annual Meetings of the International Monetary Fund (IMF), which highlighted the future of artificial intelligence, its implications for economic growth and monetary policy, the challenges facing Europe and Latin America, and the Fund’s efforts to strengthen financial stability and support its member countries.
Artificial Intelligence: Economic Opportunities and Risks Requiring Safeguards
Kristalina Georgieva, Managing Director of the IMF, warned that the world cannot afford to get artificial intelligence wrong, noting that the technology is already supporting economic growth, particularly in economies supplying the hardware and technological infrastructure required to develop and operate AI systems.
According to estimates presented by Georgieva, AI could add approximately half a percentage point to annual global growth over the course of a decade. However, realizing these gains will depend on the extent to which the technology is adopted by businesses, institutions, and economies worldwide.
Georgieva cautioned that the risks could outweigh the opportunities without appropriate safeguards. She noted that governments do not yet have sufficient knowledge to regulate the technology at the pace required by its rapid development.
She called for a greater role for industry self-regulation, involving companies and major technology-producing countries, particularly the United States, China, and India.
Jack Clark, Co-Founder and Head of Public Benefit at Anthropic, stressed the need for clear standards governing AI testing, arguing that such testing should not remain voluntary. He also emphasized that decisions about the future of AI cannot be left to companies alone.
AI Reshapes Businesses and Monetary Policy
Despite optimistic expectations for AI-driven gains, Georgieva noted that the world is still seeing incremental improvements rather than a transformation at scale.
Tiff Macklem, Governor of the Bank of Canada, emphasized that the real benefits of AI will depend on its widespread adoption across companies of different sizes and sectors.
In logistics, Tobias Meyer, Chief Executive Officer of DHL Group, highlighted agentic AI, which can draw on corporate databases to perform tasks and provide precise answers, as an important stage in the evolution of business operations.
He noted that these applications can support parcel tracking, accelerate customs clearance, and improve customer service in an industry that handles approximately 100 million parcels daily.
Meanwhile, Kevin Warsh, Chairman of the US Federal Reserve, described AI as one of the most consequential economic developments of his lifetime. He said the technology is supporting demand today while likely to increase productivity and economic prosperity over the longer term.
Warsh also predicted that AI would fundamentally transform monetary policymaking. More advanced analytical tools will enable central banks to process vast amounts of data, assess economic trends more accurately, and distinguish genuine developments from delayed, noisy, or potentially misleading indicators.
He stressed the importance of reconsidering traditional approaches when they no longer fit changing economic conditions, helping preserve institutional credibility and the effectiveness of monetary policy decisions.
The Digital Divide Threatens Unequal Growth Benefits
Georgieva warned that extending AI’s benefits requires reliable electricity, digital infrastructure, and a skilled workforce. She noted that advanced economies are approximately three times better equipped digitally than low-income countries.
She emphasized that simple AI applications accessible through smartphones could broaden access to the technology, provided that digital gaps are reduced and communities worldwide can benefit from these tools.
This divide represents a major challenge for the global economy. Without policies supporting technology, education, and workforce training, the gains from AI could be distributed unevenly across countries and businesses, widening disparities in productivity and income.
IMF Calls for Deeper Reforms in Europe and Latin America
On the economic outlook, IMF staff urged Europe and Western Hemisphere economies to accelerate reforms aimed at raising productivity and improving growth prospects amid pressures from aging populations, high energy costs, and mounting debt burdens.
The Fund projected that the euro area, excluding Ireland, would grow by 1.2% this year, while Central, Eastern, and Southeastern Europe would expand by 2.2%.
Mateusz Szczurek, Director of the IMF’s European Department, stressed the need to deepen the European single market, encourage innovation, and strengthen energy resilience. He warned that protectionist measures and broad-based industrial policies might buy economies time but would not guarantee lasting prosperity.
Western Hemisphere economies, meanwhile, are expected to grow by approximately 2.2% this year and next, supported by strong US demand, relatively favorable financial conditions, higher non-oil commodity prices, tourism, and remittances.
Nigel Chalk, Director of the IMF’s Western Hemisphere Department, emphasized the need to turn these favorable conditions into sustainable gains through credible fiscal consolidation plans, stronger investment, and improved productivity. He warned that persistently weak productivity could further widen Latin America’s gap in income and living standards.
IMF Strengthens Its Tools to Address Economic Crises
Georgieva reaffirmed that the IMF continues to develop its tools to support its 191 member countries, with increasing attention to global economic imbalances, including gaps between saving, investment, and trade.
In this context, she highlighted the need for the United States to save more, China to consume more, and Europe to invest more, describing these adjustments as important steps toward addressing imbalances among the world’s largest economies.
The Fund is also updating its economic surveillance, lending frameworks, and methods for assessing debt sustainability in low-income countries. In addition, it helps countries strengthen their financial systems and improve resilience against cyberattacks.
According to figures presented by the IMF, outstanding credit and undrawn commitments total approximately $240 billion, while unused lending capacity is nearly three times that amount. Concessional financing for the poorest member countries stands at around $36 billion, approximately four times its historical average.
To strengthen the sustainability of concessional financing, the IMF is seeking broader member support for the Poverty Reduction and Growth Trust. Thirty-nine countries have provided assurances covering approximately 48% of the required commitments. Support from European Union countries would raise that share to 74%, bringing the framework closer to the 90% threshold required for implementation.
A New Equation for Global Growth
The discussions highlight a new phase for the global economy, in which technological transformation intersects with challenges involving productivity, debt, investment, and financial stability.
While artificial intelligence offers significant opportunities to improve efficiency and economic performance, turning these opportunities into sustainable growth will depend on stronger regulatory frameworks, expanded digital infrastructure, workforce development, and faster structural reforms.
In this environment, the IMF’s role in supporting global economic stability, helping countries navigate crises, and strengthening their capacity to achieve more inclusive and sustainable growth remains increasingly important.
