IMF: AI productivity gains may ease Asia’s demographic strain

what happened

Artificial intelligence may help Asia cope with a shrinking workforce as populations age, but adoption needs to spread across the region without aggravating existing inequalities, the International Monetary Fund said, according to Reuters.

At the presentation of an IMF book on Asia’s challenges and opportunities, Managing Director Kristalina Georgieva identified demography, economic integration and technology—especially AI—as the region’s three major transformations. She said AI could add between half a percentage point and one percentage point to growth in advanced Asian economies. Capturing those productivity gains, she added, would more than counter the demographic drag.

The book’s findings indicate that China, Japan and South Korea could see their working populations fall by nearly 25% between now and 2050, with AI-driven productivity gains potentially making up for the decline. Krishna Srinivasan, head of the IMF’s Asia and Pacific department, warned that policymakers must weigh the benefits of AI against the prospect of greater divergence across the region. Advanced economies face greater exposure but are better positioned to benefit, while emerging markets are less exposed and less able to realize the technology’s upside. Reforms that improve skills and productivity could bring adoption forward by a decade or more, he said. Georgieva added that stronger regional trade agreements and fewer non-tariff barriers could lift Asia’s GDP by about 1.8% over the long term.

why it matters

The IMF’s assessment puts AI adoption, workforce skills and regional integration alongside demographics as important variables for Asia’s longer-term growth outlook.

instruments