Weekend Read: AI, the Economy, and Humanity ...

 

Dear MARIA, In today's edition, we highlight: Kristalina Georgieva on AI, the economy, and humanity How accountants can help save public finances US commercial property prices Ghana debt agreement Europe's working hours

ARTIFICIAL INTELLIGENCE Let’s Make Sure AI Benefits Humanity (Credit: X-poser/Adobe Stock) The world is on the brink of a technological revolution that could jumpstart productivity, boost global growth and raise incomes around the world, but it could also replace jobs and deepen inequality, the IMF managing director writes in a blog. Writing ahead of this week’s World Economic Forum in Davos, Kristalina Georgieva said the net effect of artificial intelligence’s rapid advance is difficult to foresee, but robust regulatory frameworks would foster a responsible AI environment, helping maintain public trust. “What we can say with some confidence is that we will need to come up with a set of policies to safely leverage the vast potential of AI for the benefit of humanity.” New IMF research shows almost 40 percent of global employment is exposed to AI. In advanced economies, about 60 percent of jobs may be impacted. In emerging markets and low-income countries, by contrast, AI exposure is expected to be 40 percent and 26 percent, respectively. “These findings suggest emerging market and developing economies face fewer immediate disruptions from AI,” Georgieva writes. “At the same time, many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations.” The December issue of the IMF's Finance & Development magazine focuses on what artificial Intelligence means for economics. Read articles by Daron Acemoglu, Simon Johnson, Ian Bremmer, Mustafa Suleyman, Daniel Björkegren, Joshua Blumenstock, Anton Korinek, Hélène Landemore, Nandan Nilekani, Tanuj Bhojwani, Gita Gopinath, Robert Horn, Jeremy Wagstaff, Kerry Dooley Young, Eswar Prasad, Anil Ari, Lev Ratnovski, Christopher Evans, Marika Santoro, Martin Stuermer, Gita Bhatt, Erik Brynjolfsson, Gabriel Unger, Andrew Berg, Chris Papageorgiou, Maryam Vaziri, and many more.

Artificial intelligence has the power to transform society in so many ways, but only a small number of companies in an even smaller number of countries hold the keys to AI’s development. So what happens when a narrow swath of humanity makes choices that will impact everyone else? In this podcast, Stephanie Bell, a Senior Research Scientist at the Partnership for AI, says guidelines are needed to ensure AI serves humanity.

FINANCE & DEVELOPMENT How Accountants Can Help Save Public Finances (CREDIT: WILLIAM_POTTER/ISTOCK BY GETTY IMAGES) Focusing on net worth and the balance sheet is a better way to manage public assets and liabilities, write Ian Ball, John Crompton and Dag Detter for Finance & Development magazine. A government’s financial health is central to the lives of its citizens, but many governments do not produce full financial statements. Those that do often publish them far too late to be of practical use or without important information about the value of the assets governments use. Governments thus deprive themselves of crucial information that could greatly improve the management of public services and the safety of public finances, they write. “Governments would benefit from complementing their current fiscal rules with a primary rule based on net worth that more comprehensively reflects their financial position.”

The commercial real-estate sector has been under intense pressure globally as interest rates have risen. In the United States, with the largest commercial property market in the world, prices have tumbled by 11 percent since the Federal Reserve started raising interest rates in March 2022. As the Chart of the Week shows, the sharp decline in prices during the current US tightening cycle is striking. Commercial property prices remained generally stable or saw smaller losses during past Fed rate hikes. Read the blog

Weekly Roundup DEBT Ghana Reaches Debt Agreement  An agreement has been reached by Ghana and its official creditors under the Group of 20 Common Framework for Debt Treatment. The IMF’s managing director, Kristalina Georgieva, welcomed the announcement “that the Ghanaian authorities have reached an agreement in principle with their official creditors on a debt treatment, consistent with the objectives of the IMF-supported program, which aims to restore macroeconomic stability and debt sustainability, build resilience, and lay the foundations for stronger and more inclusive growth.” ECONOMIC REFORMS Jordan’s Reform Program The IMF Board has approved a four-year arrangement under the Extended Fund Facility (EFF) with Jordan, for an amount equivalent to about $1.2 billion, to support the country’s economic and financial reform program. The new arrangement replaces and succeeds the previous EFF arrangement that was approved in March 2020 and that was set to expire in March 2024. ECONOMIC REFORMS Gambia’s Recovery Boosted By New Program The IMF Board has approved a new 36-month arrangement Extended Credit Facility (ECF) arrangement with The Gambia, with requested access of around $100 million. The ECF-supported program aims to strengthen economic recovery, tackle inflation, address foreign exchange pressures, reduce debt vulnerabilities, advance structural reforms, and foster strong and inclusive growth. WAGES Europe's Decline in Average Hours Worked Three years after the COVID-19 crisis, employment and total hours worked in Europe fully recovered, but average hours per worker did not. A new IMF staff paper analyzes the decline in average hours worked across European countries and finds that it is not cyclical but predominantly structural, extending a long-term trend that predates COVID-19. The decline also mainly reflects reduced hours within worker groups, not a compositional shift towards lower-hours jobs and workers, and men—particularly those with young children—and youth drive this drop. INTEREST RATES European Monetary Policy Pass-Through  A new IMF staff paper shows that the “pass-through”—the extent to which changes in monetary policy rates lead to changes in loan and deposit rates for households and firms—in the post-pandemic hiking cycle has been heterogenous across European countries and types of interest rates. The pass-through has generally been weaker and slower, except for rates of non-financial corporation loans and time deposits in euro area countries. And differences in pass-through over time and across countries for most deposit rates are correlated with financial sector concentration, liquidity, and loan opportunities.

MARK YOUR CALENDAR

JAN 25 | 11 AM ET Sovereign Debt Ceyla Pazarbasioglu, director of the IMF’s Strategy, Policy, and Review Department, joins the FT’s chief economic commentator Martin Wolf to discuss current challenges and the road ahead.

Thank you again very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.

Nick Owen Editor IMF Weekend Read nowen@IMF.org