AI could boost Asian growth but widen regional divide: IMF

Artificial intelligence could add as much as 1 percentage point to annual growth in advanced Asian economies over the long term but risks widening regional disparities, according to an International Monetary Fund study.

The IMF working paper, AI and Economic Divergence in Asia, examines how differences in capital, skills, productivity and digital infrastructure could affect countries’ ability to adopt the technology.

The study estimates that AI could raise average annual growth by 0.5 to 1 percentage point in advanced Asian economies and by 0.2 to 0.8 percentage point in emerging-market and developing economies, depending on the pace of technological progress.

Advanced economies such as Singapore and South Korea are positioned to adopt AI faster because of their strong digital infrastructure, skilled workforces and access to capital.

Many emerging Asian economies, however, could begin widespread adoption one or two decades later, with substantially longer delays possible in low-income countries.

Before adoption accelerates, emerging and developing economies could record annual growth about 0.5 to 0.6 percentage point lower than under a scenario without the global AI transition.

The divergence could become self-reinforcing as early adopters attract investment and accumulate capital faster. Stronger global demand for capital could also raise interest rates, making it more difficult for late adopters to finance the infrastructure needed to catch up.

The findings are based on model simulations rather than economic forecasts and depend heavily on the assumed speed of technological development.

The paper also found that AI could reshape employment because the technology is capital-intensive and favors skilled labor, potentially reducing labor’s overall share of income.

The study was highlighted as the IMF and World Bank opened their annual meetings in Bangkok, where AI’s effects on productivity, employment and inequality are among the main topics.