The IMF’s Kristalina Georgieva on the AI ‘Tsunami’ Hitting Jobs

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The IMF's Kristalina Georgieva on the AI 'Tsunami' Hitting Jobs BY JUSTIN WORLAND Senior Correspondent, TIME TIME spoke with IMF chief Kristalina Georgieva late last year about how AI and trade tensions are reshaping the global economy. This interview has been condensed and edited for clarity. You've said recently that "uncertainty is the new normal." What do you mean by that? We are experiencing the simultaneous impact of multiple transformative forces: geopolitics, technology, demography, climate. They all are accelerating the transformation of the world economy—the way we live, the way we work, the way we interact with each other. And the impact of this transformation is more fog within which we operate, more uncertainty. With regard to trade, you have noted that trade continues to be "an engine of growth" even amid all of this year's disruption. Do you think that we're out of the woods? No. This is a story that is still to be written. We have left one equilibrium that we knew, one in which trade was guided by globally acceptable rules, and we are moving towards possibly a new equilibrium. But we are not there yet. In 2024, around the time of Davos, you wrote a piece titled "AI will transform the economy. Let's make sure it benefits humanity" that largely focused on the labor-market implications of AI. What's the verdict? We definitely see benefits for humanity with many of the AI applications penetrating the economy and the way we work. From agriculture to health to education to transport, we see that AI is generating benefits. It is adding a boost to productivity. The reason we have slow economic growth is mostly because productivity growth has been so underwhelming, except for the U.S., and this is where AI is the most potent force of transformation. We also see that we remain under-prepared for the impact of AI on the labor market. It is like a tsunami hitting the labor market, especially in advanced economies, where we assess 60% of jobs to be impacted. What sort of policies are you counseling to address the risks of AI? For advanced economies, concentrate primarily on penetration and on regulation and ethics. Make sure that innovation is a source of productivity growth across all sectors of the economy, and make sure that you have some meaningful regulation and ethical foundation to reduce the risk of this divergence in societies. How do you use AI? I personally took, twice, training on how to use productivity-enhancing tools, starting with Copilot, and then we have a couple of fund-specific AI assistants. We urge people to be creative and to introduce things that are AI-based productivity-enhancing tools. It occurs to me that you're almost running a live economics experiment. Are you seeing productivity gains that match your investment? So far, yes. We are a data institution. The reason we are so predisposed for AI is because we have so much data. Inflationary pressures are still a concern, and there's no real consensus on the best path forward. How should central banks approach the next year? Central banks are facing pressure, particularly here in the U.S., to keep rates aligned with political interests. What are the risks? The good news is that inflation globally is trending downwards. Central banks have been an incredible source of confidence in a world of uncertainty. Central-bank independence is absolutely paramount especially in this fast-changing world. We also recognize that central banks' independence doesn't mean no accountability. They have to continue to lean forward on how they can demonstrate that they're accountable to people, that they have a rigorous process of assessing their models, their decisionmaking process. You're going to China soon. The Chinese economy is critical to the global growth picture. What does a durable growth model for China look like amid all of the challenges? It's like a fork in the road—whether they continue with their growth model that has served them well for 40 years, which is export-oriented with significant support coming from industrial policy from the Chinese government, or they would recognize that they are now so big that they need to shift to a more consumption-based model. If China doesn't change this model, and continues to push cheap goods to the rest of the world, they inevitably would become a major source of trade tensions themselves. And then countries may be tempted to put tariffs on Chinese goods. Share the Leadership Brief by clicking here.   Want more from TIME? Sign up for our other newsletters.         Subscribe to TIME TIME may receive compensation for some links to products and services in this email. Offers may be subject to change without notice. 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