AI 'widening economic inequality', IMF chief warns

According to Dawn, IMF chief Kristalina Georgieva warned on Wednesday that artificial intelligence could widen global economic inequality, since growth in AI-related trade is concentrated in a few economies such as the United States, China and India. She described AI as a force now rapidly shaping the relative fortunes of nations, while noting that most other economies are largely left out of its gains. Her remarks came in a speech ahead of next week's IMF annual meetings in Singapore.

Georgieva also said heavily indebted advanced economies are not moving decisively enough, and she called for hard fiscal choices to repair public finances. She pointed to rising borrowing costs, driven by inflation and interest rates, which are being compounded by heavy bond issuance from companies funding AI investment. Higher yields, she added, are pushing up interest bills while budgets are stretched and spending needs such as defence compete for funds.

Georgieva said the oil-driven inflation shock had been contained through reserve stocks, efficiency gains and contingency planning. However, she cautioned that high energy costs may linger even if the Iran war ends swiftly. She noted oil remains above $100 and diesel is at record levels. She praised central banks for raising rates and called a prudently hawkish stance a good idea in many countries, urging policymakers to act now.