AI cannot be restricted within boundaries: IMF’s Gita Gopinath – Times of India

First Deputy Managing Director of the IMF Gita Gopinath was in Gandhi Nagar For the G20 Finance Ministers and Central Bank Governors meeting. In an interview with TOI, he cautioned on the adverse impact of generative AI and recommended regulation, adding that even technologists have called for it. Part:
Is global inflation becoming more broad based?
Headline inflation appears to have peaked last year, but core inflation, which has moderated slightly, is still quite high in many countries. This is the challenge facing central banks, including the US euro Area. Our advice is to stay the course and maintain the accommodative monetary policy stance until there are signs that core inflation is on course to return to target.
We say it is important to rely on the data because these are uncertain times and interest has already risen significantly, but given our experience from the 1970s, we caution central bankers against prematurely easing policy. He also warns.
How do you see the hardening of rates will impact growth?
You should expect to see slower growth, softening labor markets, we are at record low unemployment rates in many G20 countries. In terms of spillovers, it is a deeply integrated world with trade and financial ties, and when interest rates rise, the cost of borrowing in other countries rises. This time, particularly strong emerging markets have handled it very well and we haven’t seen a debt crisis. We see marginal markets and some vulnerable emerging markets being pushed out of the financial markets and having to buy at very high interest rates. Solutions for them include IMF programs, debt restructuring in many cases. It is important for the whole world that America is able to win the battle against inflation.
Many agencies see India as one of the bright spots in the global economy. What are the challenges that need to be addressed?
When you look at India’s growth rate, and compare it to other emerging and developing markets, it is definitely a bright spot. In terms of headwinds, there could be spillovers if growth slows more dramatically than we anticipate or if inflation is a more serious problem in advanced economies, requiring central banks to raise rates.
Will emerging technologies like generative AI affect employment in countries like India, which have a large youth population?
We have very strong job markets in many parts of the world. In many developing countries there is a mismatch between the types of jobs being created and the skills people have. This remains a challenge. How technology will affect jobs will depend on the type of automation you have in place. Automation in the car industry has hollowed out the middle class in many countries. The preliminary evidence we are seeing of Generative Artificial Intelligence is that it is more level playing field, meaning it creates more junior positions and these positions have higher pay increases. This is because you are able to transfer the knowledge that comes with experience to junior employees through generic AI technology. We also need to be careful that generative AI will create new types of productive jobs.
What are the risks of these technologies and is it time to start regulating them?
In terms of regulation, we have to be careful in ensuring that generic AI is used for the benefit of humanity. We are aware of the risks involved and the issues associated with bias in the way we summarize the data, AI hallucinations. We need proper regulations to protect the consumers. We need the right amount of skills in the labor market, perhaps lifelong learning. It is also important to have a social safety net in place to ensure that those who are losing jobs receive state support and can return to the workforce. On the tax policy front, we have to make sure that you are not encouraging the use of AI because capital taxes are lower than labor taxes. There should be globally set rules on this front.
Who will set those rules?
Several agencies have stepped in – the European Union coming up with regulations, the United Nations talking about its role, the G20 having a working group and at some point the G20 is likely to take up this area as well Is.