Artificial intelligence is a "slow-moving tsunami" that will reshape labour markets, widen inequality and challenge how governments collect taxes, the head of the International Monetary Fund warned on Monday. Speaking at the annual meetings of the IMF and World Bank in Bangkok, managing director Kristalina Georgieva said policymakers must rethink education and "act now" to help society adapt to a transformation she described as already under way.
"It is a slow-moving tsunami, but tsunami nonetheless," Georgieva said during her first appearance at the meetings, addressing a session on AI's impact on employment.
Routine jobs shrink, low-paid jobs grow
Georgieva said AI is already hollowing out demand for many human workers by taking over routine, repetitive tasks. At the same time, it is increasing the number of low-paying jobs in sectors such as construction and data centres — "not a story to celebrate," she said.
Young workers in AI-exposed fields have already seen a slowdown in hiring, leaving new entry-level applicants far more vulnerable, she added. A study cited by the IMF found that 10% of jobs in the United States already require AI skills.
The warning extends well beyond unemployment. Georgieva argued that the shift from labour to capital carries far-reaching consequences for public finances, because labour income has traditionally been the main source of tax revenue. If machines do more of the work, governments may find their tax bases eroded — a risk that, she said, forces a fundamental rethink of how states fund themselves.
40% of jobs could be affected
The IMF estimates that AI could lead to 40% of jobs worldwide being augmented, downgraded or eliminated over time, with the impact varying considerably across economies depending on workforce skills, technological readiness and the ability to adapt.
Concern is also growing that the technology will widen inequality: its gains so far remain concentrated among a narrow set of workers and economies, despite a global investment supercycle. Singapore's president Tharman Shanmugaratnam told the Bangkok meetings that AI adoption was weakening demand for fresh graduates in some exposed sectors, urging governments to address the decline in entry-level employment and prevent a widening gap between advanced and developing economies.
"We cannot today imagine what exactly the world of work will be five years from now," Georgieva said. "But we can be disciplined and carefully assess what is happening, and then draw lessons, but — most importantly — act on them now."
The boom side: AI keeps global growth at 3%
Despite the employment headwinds, Georgieva stressed that AI investment is currently propping up the world economy. The investment boom is delivering what she called "a demand shock, an investment shock" that is keeping global growth at around 3%, even as the world is dragged down by an energy supply shock — the same energy shock flagged by UNCTAD in its latest growth forecast.
The IMF estimates the spread of AI could add between half a percentage point and a full point to growth in advanced Asian economies, and 0.2 to 0.8 points in emerging Asian economies — a boost she called "a very big deal" that would more than offset the drag from ageing populations across the region. The Fund, which in July projected 3% global growth for 2026, will release an updated outlook on Tuesday.
The United States, China and India are the most important producers in the AI supply chain, Georgieva noted, but many of the firms building the needed infrastructure are in Asia — including Thailand, host of this year's meetings. Some 18,000 people are expected to attend the week-long meetings of the IMF's 191 members, though several ministers will skip them to focus on domestic priorities, including US Treasury Secretary Scott Bessent and Spanish Finance Minister Arcadi España.
Why governments are nervous about tax
The core of the fiscal warning is simple arithmetic: most governments still rely heavily on payroll and income taxes. If AI displaces labour while profits accrue to a small number of capital owners and technology firms, the tax base shrinks even as social spending — retraining, welfare, unemployment support — rises. Georgieva's message to the Bangkok audience was that education reform and new approaches to revenue can no longer wait for a clearer picture of the AI future; the hollowing-out is visible in hiring data already.
Her remarks add to a growing chorus of caution around the economics of AI. While corporate investment in chips, data centres and models has been fuelling markets — and, according to some analysts, a wave of AI-driven corporate debt — the Fund is now asking who ultimately benefits, and whether the benefits will reach the workers whose jobs are being transformed.
Frequently Asked Questions
What did the IMF chief say about AI?
Managing director Kristalina Georgieva called AI a "slow-moving tsunami," warning that it is already reducing demand for human workers in routine jobs, increasing low-paid work in sectors like construction, and threatening tax revenues by shifting economic activity from labour to capital.
How many jobs could AI affect?
The IMF estimates AI could affect around 40% of jobs worldwide over time — with roles potentially enhanced, downgraded or eliminated — depending on each economy's workforce skills, technological readiness and ability to adapt.
Why is AI a threat to tax revenues?
Because governments traditionally raise most of their revenue from labour income. If AI takes over work while profits concentrate among a few capital owners, the tax base shrinks even as demand for social spending and retraining rises.
Did Georgieva say anything positive about AI?
Yes. She said the AI investment boom is keeping global growth at around 3% despite the energy supply shock, and could add up to a full percentage point to growth in advanced Asian economies — more than offsetting the drag from ageing populations.
Sources: reporting by The Japan Times and The Straits Times.
