AI Boost: Asia's Key to Thriving Amid Population Decline

Asia's annual economic growth could increase by 0.2 to 1 percentage point with AI integration, offsetting population decline, per IMF. Despite potential challenges, AI can enhance productivity. Regional trade integration and renewable energy adoption could further sustain growth, says IMF's Krishna Srinivasan.

The International Monetary Fund (IMF) has highlighted artificial intelligence (AI) as a potential catalyst for Asia's economic growth, suggesting it could boost annual growth by 0.2 to 1 percentage point. This may help counteract the adverse effects of a shrinking population in the region, according to IMF Asia and Pacific Department Director Krishna Srinivasan.

Srinivasan warns that Asia's declining population could reduce economic growth by 0.3 percentage point annually by 2050. Hence, leveraging AI for higher productivity is increasingly crucial as the region grapples with ageing populations, sluggish productivity growth, and growing trade fragmentation.

AI could address these challenges by raising productivity, particularly in nations with a shrinking workforce. Regions with skilled labor, robust institutions, and capital stand to benefit most. However, delayed AI adoption in lower-income countries could spur economic disparities. Additionally, regional trade integration and renewable energy use are essential for sustaining Asia's growth trajectory, according to Srinivasan's analysis.