Gopinath also provided recommendations to mitigate AI’s risks without curtailing its positive side. These include ensuring tax policies don’t inefficiently favor automation over workers, helping workers with education and new skills, strengthening the social safety net with more generous jobless benefits, and using AI to upskill workers, target assistance better, and flag early warnings in financial markets. She emphasized the need for governments, institutions, and policymakers to move quickly in terms of regulation and preparation for potential disruptions in labor markets.
Key takeaways:
- The disruptive effects of artificial intelligence (AI) on the economy and financial markets may not be fully realized until a downturn occurs, potentially leading to a crisis if AI risks are not addressed, warns IMF First Deputy Managing Director Gita Gopinath.
- AI could amplify the next recession by disrupting labor markets, financial markets, and supply chains, potentially converting an ordinary downturn into a deeper economic crisis.
- AI risks include job losses due to automation, poor performance of new AI models in novel events leading to rapid asset sales, and supply-chain breakdowns due to AI models trained on outdated data.
- Gopinath suggests mitigating AI risks through tax policies that don't favor automation over workers, providing education and new skills to workers, strengthening the social safety net, and using AI for upskilling, better targeting assistance, and early warning in financial markets.