AI create opportunities & efficiencies

The head of the IMF advises Arab nations to increase productivity and reduce the "sugar rush" of fiscal stimulus.

According to Kristalina Georgieva, AI will create opportunities and efficiencies.


Kristalina Georgieva, chief of the International Monetary Fund. EPA

The head of the International Monetary Fund (IMF) has stated that in order for the Middle East to recover from the chaos brought on by the pandemic and wars, states must increase worker productivity and reduce state-led fiscal stimulus.

Using the UAE as an early adopter, Kristalina Georgieva stated that AI and the digitization of services might significantly benefit workforces. According to her, decision-makers ought to stop supporting state-led initiatives and instead let the private sector thrive.

"Too frequently, fiscal stimulus is used by nations to increase short-term domestic demand. "This'sugar rush' gives short-term growth, but it often leads to inflation and financial instability," Ms. Georgieva stated during this week's World Governments Summit's Arab Fiscal Forum in Dubai.

"Instead of merely stepping on the gas, we need a stronger engine." The International Labour Organization reports that the Arab world has the lowest productivity, with a significant contributing factor being the absence of a manufacturing or financial services base in many of these countries.

We require a more powerful engine rather than just pressing the accelerator.
Georgieva Kristalina
"Our research in the Arab region shows how to do it: accelerate digitalisation, reduce the state’s footprint in the economy, foster trade diversification, and encourage the free flow of capital to dynamic firms," she stated. In this regard, certain nations rank among the most advanced in the world. By 2030, digital innovation and AI technologies are predicted to greatly increase the UAE's GDP.Spending more on R&D will increase productivity even more.

She also cited Morocco's New Development Model and Saudi Arabia's regulatory reform as excellent examples of progress. There is already investment in electric vehicles and battery technologies, especially in the Gulf. In an area of the world where governments collect little from their citizens, Ms. Georgieva also discussed the necessity of strengthening the tax base.

Global growth is expected to stay at 3.3% this year and next, according to IMF projections, before reducing to slightly over 3% over the following five years, which is much less than the historical norm.According to Ms. Georgieva, a recovery in oil output and a reduction in conflict are likely to propel growth in the Middle East and North Africa back to roughly 3.6% in 2025.Ms. Georgieva expressed her optimism that the recent hostilities in the Middle East will be resolved and that stability will be achieved.

"I pray that Yemen and Sudan can achieve peace and stability. The international community's restoration efforts offer a "unique opportunity to rebuild better and lay the foundations for stronger growth," she added, adding that she hopes the ceasefire in Gaza and the political shifts in Syria and Lebanon can usher in new beginnings.

A decline in tourism in Jordan and Egypt is just one of the repercussions of wars in the Middle East, as Jihad Azour, the IMF's top official in the region, demonstrated to an audience. He added, "And the situation in Sudan remains dire."

Opportunities to transform the world by embracing new technology and utilizing talent to build a more resilient world will be discussed during this week's conference. The three-day event at Madinat Dubai is expected to draw hundreds of technology professionals, business executives, and decision-makers.

On the last day, Elon Musk is scheduled to give a speech, most likely through a live webcast. Among the heads of state who will speak are the prime ministers of Georgia, Kuwait, and Pakistan. Other prominent guests include Google CEO Sundar Pichai and Oracle CEO Larry Ellison, who will speak with Sir Tony Blair.

There will be some discussion about the future of the Middle East and efforts to rebuild areas affected by conflict, and several sessions will deal with the future of artificial intelligence. Another heated topic will be the necessity of modernizing the Middle East.

On the first day, Dr. Fahad Alturki, the chairman and director general of the Arab Monetary Fund Board, also gave a speech. "Geopolitical crises and developments have had an impact on the resilience of the global economy over the past five years, which has affected growth rates, inflation, and unemployment," he said.