IMF Warns AI Could Hit 40% of Jobs, With Young Workers in the Firing Line

Artificial intelligence is helping sustain global economic growth despite an energy shock, but the technology could reshape employment for millions of workers, with young people entering the labor market facing some of the earliest disruptions, according to International Monetary Fund Managing Director Kristalina Georgieva.

Speaking Monday in Bangkok at the opening of the IMF and World Bank annual meetings, Georgieva described AI as a “slow-moving tsunami” that could eventually affect around 40% of jobs worldwide and approximately 60% in advanced economies. Low-income countries face estimated exposure of about 23%, largely because adoption remains more limited.

The warning comes as investment in AI infrastructure provides a significant boost to economic activity, even while higher energy prices weigh on countries around the world.

AI Investment Supports Growth Despite Energy Pressures

Global economic growth is projected to reach 3% in 2026, down from 3.5% in 2025, according to the IMF’s July outlook update. Georgieva said spending on AI is helping keep growth near that level despite the economic fallout from the war in the Middle East and the resulting energy shock.

The benefits, however, are unevenly distributed. Asian economies producing semiconductors and other hardware essential to AI development are among the biggest beneficiaries of the investment boom.

Georgieva said wider AI adoption could add between 0.5 and 1 percentage point to annual growth in advanced economies, while emerging markets could see gains of 0.2 to 0.8 percentage points. At the upper end of those estimates, the gains could more than offset the economic drag from aging populations in parts of Asia.

The IMF’s July update highlighted stronger-than-expected performance among major net exporters of AI hardware, including Taiwan, South Korea, Thailand and Malaysia. These economies exceeded the Fund’s first-quarter growth forecasts by an average of 4.4% on an annualized basis. South Korea recorded growth at a 7.5% annualized pace, compared with the 1.8% forecast the IMF had issued in April.

AI-related hardware and technology products now account for more than 10% of global goods trade, Georgieva said in a speech in Singapore last week. She also argued that investment in AI, measured against global GDP, could eventually surpass the spending that went into developing railways or electricity grids.

Yet countries outside the AI supply chain risk missing out on much of the expansion, potentially widening existing economic disparities.

Young Workers Face Early Disruption

Employment is one of the most immediate concerns. Georgieva said AI could transform or eliminate tasks across roughly 40% of jobs globally, with exposure substantially higher in advanced economies.

Young people entering the workforce may face particular pressure because many entry-level positions rely on routine tasks that AI systems can increasingly perform. That could make it harder for graduates to secure their first jobs and gain the experience traditionally required to progress in their careers.

Singapore President Tharman Shanmugaratnam, who spoke on the same panel, said demand for graduates’ first jobs was already declining. He warned that AI could widen the divide between wealthy and developing economies unless governments take steps to address the disruption.

The IMF’s estimates measure job exposure to AI, however, rather than predicting that every affected position will disappear. The eventual impact will depend on how businesses deploy the technology, which tasks are automated and whether new roles emerge alongside those changes.

AI Could Put Pressure on Public Finances

The economic consequences could extend beyond employment. Georgieva warned that AI could weaken government revenues if it shifts a larger share of income from workers toward the owners of capital.

That shift matters because governments rely heavily on taxes linked to wages and employment. If AI reduces labor income or changes how income is distributed, public finances could come under pressure even if productivity and corporate earnings increase, according to The Block.

The challenge is particularly significant for developing economies, where limited access to technology could prevent businesses and workers from capturing the benefits of AI while leaving governments with fewer resources to manage the transition.

World Bank President Ajay Banga said the institution was supporting smaller-scale AI tools that do not depend on large language models. The initiatives target practical applications in areas such as agriculture, healthcare and education, with a focus on emerging markets.

The AI Boom Carries Financial Risks

The investment surge also brings risks for financial markets. Georgieva said the construction and expansion of AI infrastructure are contributing to inflationary pressures. She also warned that weaker-than-expected earnings from major AI companies could trigger broader market repercussions, given the substantial borrowing used to finance the sector’s expansion.

The IMF is scheduled to publish its full World Economic Outlook on October 13, providing its first update to the 3% global growth projection since July.

The outlook will offer a clearer picture of how the Fund assesses the balance between AI-driven investment, geopolitical tensions and energy costs.

For now, the technology presents a dual challenge for policymakers: capturing its potential to lift productivity and growth while preparing workers, public finances and developing economies for a labor market that could look markedly different in the years ahead.