China needs structural reforms to avoid “a fairly significant decline in growth rates,” warned the managing director of the International Monetary Fund, Kristalina Georgievain an interview given this Monday to the CNBC network.
In the short term, China’s real estate sector still needs “fixing,” along with a high level of local government debt, Georgieva said, speaking to CNBC at the World Economic Forum in Davos.
“Ultimately, what China needs is structural reforms to continue opening the economy, balance the growth model more towards domestic consumption, that is to say, create more confidence in people, so that they don’t save, but rather spend more,” Georgieva remarked, quoted by CNBC.
AI will bring risks and ‘tremendous opportunity’ to global economy, says IMF chief
On the other hand, Georgieva gave her opinion on the artificial intelligence (AI) and impact on the global economy, when raising the risks it will entail for job security, but also said AI offers a “tremendous opportunity” to boost sagging productivity levels and fuel global growth.
“Advanced economies and some emerging markets will see 60 percent of their jobs affected,” he said in an interview in Washington to AFP, citing a new report from the International Monetary Fund (IMF) on the subject.
“And then it goes down to 40 percent for emerging markets, 26 percent for low-income countries,” He added, referring to the IMF report, which indicates that, overall, almost 40% of global employment is exposed to AI.
The report indicates that half of the jobs affected by AI will be negatively affected, while the rest can actually benefit from increased productivity due to AI.
“Your job may disappear completely, which is not good, or artificial intelligence may improve your job, so that you are more productive and your income level increases.”Georgieva explained to AFP shortly before leaving for the World Economic Forum in Davos, Switzerland.
Although AI will initially have less impact on emerging markets and developing economies, they are also less likely to benefit from the benefits of the new technology, according to the IMF. “This could exacerbate the digital divide and income disparity between countries”the report continued, adding that older workers will likely be more vulnerable to the change that AI will bring.
The IMF sees an important opportunity for policy prescriptions to help address these concerns, Georgieva told AFP. “We must focus on helping low-income countries, in particular, move faster to be able to take advantage of the opportunities that artificial intelligence will present,” she said.
IMF: forecasts on the world economy
The IMF will release updated economic forecasts later this month, that will show that the world economy is on track to meet its previous forecasts, Georgieva said. It is “set for a soft landing,” she said, adding that “monetary policy is doing a good job, inflation is coming down, but the job is not quite done.”
“So we find ourselves in the difficult situation of not relaxing monetary policy either too quickly or too slowly,” he claimed. The global economy could use an AI-related productivity boost, with the IMF forecasting it will continue to grow at historically low levels over the medium term.
Georgieva said 2024 will likely be “a very tough year” for fiscal policy around the world., as countries will try to cope with the debt burden accumulated during the Covid-19 pandemic, and rebuild depleted reserves. Additionally, billions of people will go to the polls this year, putting additional pressure on governments to increase spending or cut taxes to win popular support. The IMF’s concern, according to Georgieva, is that governments around the world will spend too much this year and undermine their hard-won progress in the fight against high inflation.
Source: Ambito
