India’s workforce is increasingly exposed to Artificial Intelligence (AI), with a recent estimate stating that about 26% of the country's workers are likely to be affected by AI technologies.
This revelation comes from Gita Gopinath, the Deputy Managing Director of the International Monetary Fund (IMF), who spoke at the World Economic Forum in Davos.
While some may fear the negative consequences of this technological shift, Gopinath provided a more balanced view. She explained that while AI could potentially displace jobs, it will also benefit a substantial portion of the workforce.
According to Gopinath, about 14% of jobs within this exposed workforce will see benefits from AI and related technologies. This is promising, as the integration of AI into these roles could lead to greater productivity and new opportunities.
However, she acknowledged that a further 12% of jobs might face a "displacement effect," where workers may lose their roles due to automation and AI advancements.
Gopinath also reflected on the broader implications of AI for global economies. She noted that the uncertainty surrounding AI’s impact on productivity and job markets makes it difficult to predict the overall economic outcomes.
However, she stated that productivity is expected to rise annually by between 0.1% and 0.8%, a significant impact considering the world’s average growth rate of 3%.
While AI promises increased efficiency, its effects will vary depending on the pace of technological development, the rate at which countries adopt AI, and the efforts made to prepare the workforce for these changes.
Gopinath stressed the importance of building digital infrastructure and ensuring that workers are equipped with the necessary skills to harness these new technologies effectively.
On a larger scale, Gopinath discussed global economic growth. She said that the IMF projects global growth for 2025 and 2026 to be between 3% and 3.5%, but this growth will not be uniform across all countries.
While the United States appears strong, with an upgraded growth forecast, Europe faces a weaker economic outlook, and China is dealing with its own set of challenges.
Gopinath emphasised that countries will need to take specific actions based on their own unique circumstances.
For instance, China needs to address its property sector and boost domestic demand, while Europe must focus on raising productivity. Each nation’s path to balanced growth is shaped by its own internal factors and the global geopolitical environment.
Turning to India, Gopinath expressed optimism despite a slight slowdown in the country’s economic growth. India remains the fastest-growing major economy in the world, even though the projected growth for the current fiscal year is lower than expected at 6.5%.
She attributed this slower pace to a delayed start to public investment following the April-June elections. However, she remains hopeful, noting that rural sector consumption is strengthening and India is expected to bounce back.
For India to achieve higher growth levels, Gopinath recommended that the country focus on improving public infrastructure and creating a more conducive environment for business.
This includes making processes like buying and selling land easier and reducing tariffs, which she deemed too high. These steps, she believes, will be crucial in propelling India to its desired growth levels.
When asked about the potential for a trade war under US President Donald Trump’s new administration, Gopinath expressed caution. While she didn’t comment in-depth on the specifics of the trade policies, she stated that the impact of any new tariffs would depend on their nature and magnitude.
She noted that there is already positive sentiment in the US following Trump’s second-term inauguration, which could influence foreign investment trends in the country.
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