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Artificial Intelligence: IMF Chief Sees Risks, Opportunities for Global Economy

IMF Managing Director Kristalina Georgieva warned the world of the risks posed by the spread of AI such as job security

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Artificial Intelligence: IMF chief sees risks, opportunities for global economy

International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned the world of the risks posed by the spread of Artificial Intelligence (AI) such as job security but also highlighted the opportunities it offered in terms of increasing efficiency.

While speaking in an interview with AFP, reported early Monday, IMF’s chief said while quoting statistics from a new global lender’s report: “AI will affect 60% of jobs in advanced economies. With AI expected to have less effect in developing countries, around 40% of jobs globally are likely to be impacted.” “And the more you have higher skilled jobs, the higher the impact,” she stated.

However, the IMF report published Sunday evening notes that only half of the jobs impacted by AI will be negatively affected; the rest may actually benefit from enhanced productivity gains due to AI.

“Your job may disappear altogether — not good — or artificial intelligence may enhance your job, so you actually will be more productive and your income level may go up,” the 70-year-old said.

IMF Report on AI

The IMF report predicted that, while labour markets in emerging markets and developing economies will see a smaller initial impact from AI, they are also less likely to benefit from the enhanced productivity that will arise through its integration in the workplace.

“We must focus on helping low-income countries in particular to move faster to be able to catch the opportunities that artificial intelligence will present,” Georgieva said.

“So artificial intelligence, yes, a little scary. But it is also a tremendous opportunity for everyone,” she said.

She said: “The IMF is due to publish updated economic forecasts later this month which will show the global economy is broadly on track to meet its previous forecasts.”

The director also said that “it is poised for a soft landing,” adding that “monetary policy is doing a good job, inflation is going down, but the job is not quite done.”

“So we are in this trickiest place of not easing too fast or too slow,” she said.

The global economy could use an AI-related productivity boost, as the IMF predicts it will continue growing at historically muted levels over the medium term.

“God, how much we need it,” Georgieva said. “Unless we figure out a way to unlock productivity, we as the world are not for a great story.”

Hardships in 2024

Georgieva said 2024 is likely to be “a very tough year” for fiscal policy worldwide, as countries look to tackle debt burdens accumulated during the Covid-19 pandemic, and rebuild depleted buffers.

Billions of people are also due to go to the polls this year, putting additional pressure on governments to either raise spending or cut taxes to win popular support.

“About 80 countries are going to have elections, and we know what happens with pressure on spending during election cycles,” she added.

The concern at the IMF, Georgieva said, is that governments around the world spend big this year and undermine the hard-won progress they have made in the fight against high inflation.

“If monetary policy tightens and fiscal policy expands, going against the objective of bringing inflation down, we might be for a longer ride,” she added.

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Artificial Intelligence

Artificial Intelligence is Heading to Asset Management

AI deals have become lucrative with nearly $1.9 billion of equity funds pouring into asset management

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AI is headed where the money is: asset management

The business of managing people’s money is lucrative for Artificial Intelligence deals. Nearly $1.9 billion of equity funds have poured into asset and wealth management sector, according to CB Insights, a market data firm that tracks private companies.

About $1 billion of the funds went into data and analytics, where advisers and analysts can rely on generative AI as their handy research assistant; feeding proprietary and public information into the system, AI can help make timely decisions, automate workflows, and generate communication for clients.

The technological leap comes in good time as advisers are grappling with the magnitude of research needed to meet customer demands. With four in five financial advisers expecting to use artificial intelligence to engage clients and automate manual tasks, consulting firm Accenture projects generative AI will be used in 90% of banking working hours.

“The asset, wealth, [and] financial management sector is undergoing a seismic shift in consumer demand,” said Yasin Rosowsky, co-founder and chief technology officer of Arabesque AI, a sustainable fintech provider whose AI generates customized portfolios.

Rosowsky told Quartz that the next generation expects a “Netflix” treatment filled with choices—a “watch what you want, when you want, how you want” approach to portfolio management—and their preferences, are increasingly focused on sustainability and impact. This additional focus is time-consuming to meet and that’s where AI can step in.

Gen Z want to invest in causes they personally align with

Two-thirds of young people want to put their money in causes they personally align with, according to a recent US Bank survey. That means more demand for specific information that requires time and effort to dig into each business.

Arabesque AI’s engine, Aether, uses cloud-based computation to forecast roughly 20,000 global company prices and 250 features every day. The fintech firm focuses on layering sustainability and climate risk factors into each portfolio. “Tasks that once required months of expensive work from entire teams of researchers can now be automated, thus lowering cost [and] making them more accessible,” said Rosowsky.

JPMorgan Asset & Wealth Management also acquired a similar platform two and a half years ago. Its CEO Mary Callahan Erdoes told investors in May that through its company OpenInvest allows users to “personalize [their] values” by adding those preferences to the AI. Generative AI can then tailor a customer’s entire wealth, including assets held away, to those values-based choices. “It will be the Holy Grail of how people think about managing their assets, and we’re well on our way,” she said.

AI handles the TL;DR financial information

Advisers are also finding generative AI tools to help them find and summarize information.

Orion Advisor Solutions is a fintech that specializes generating “smart summaries” for advisers to evaluate a portfolio according to their client’s wishes. The so-called smart summary draws on financial data and gives talking points for the adviser to explain the impact of the portfolio changes.

“In wealth management, there are some complex things in a portfolio, like rebalancing, tax optimization, and asset allocation [that] the adviser usually needs to explain it to the client,” said Mustapha Baassiri, Orion’s chief technology officer. That’s where a generative AI comes in, he said, as it can personalize talking points to the client’s persona.

 

Man with a microphone in a congressional hearing

 

 

OpenAi’s CEO Sam Altman said at last week’s developer conference that ChatGPT has reached 100 million weekly active users, adding that more than 92% of Fortune 500 companies use ChatGPT

 

Photo: ELIZABETH FRANTZ (Reuters)

 

 

GPT-4 is superior, but advisers are looking elsewhere

So far, the asset and wealth industry is mainly using ChatGPT as its foundational large language model (LLM). Still, companies say they are looking to diversify.

Baassiri finds GPT-4, OpenAI’s latest release, to be the most advanced, and that means they didn’t “have to tweak it as much, so out of the box works for our use case.” As with any startups, the business want to create the product as quickly as possible and launch it to the market.

“It all comes down to price, speed, and how well the model works, but that hasn’t been an issue for us,” he added. However in the future, companies like Orion may need bigger models for more complex products—and that’s where their cloud provider may step up.

Orion uses Amazon Redshift as their primary data warehouse and analytics platform. With Amazon pushing their LLM offerings to cloud customers, it’s hard not to take note as it could be convenient to have all the infrastructure hosted at the same place. “We will definitely look at their model to use it and compare it to OpenAI model,” said Baasiri.

Arabeque AI uses Google Cloud as part of Google’s startup program and are considering using a hybrid cloud solution to do the computation due to cost. While it feels like AI could be a job-killer, AI makers and users alike say humans are still very much needed.

“What AI is doing is summarizing, translating… A human adviser is doing much more than that. They’re managing client relationships,” Baasari said. “I don’t think there’s a risk of replacing a human adviser anytime soon.”

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Artificial Intelligence

With the Advent of Artificial Intelligence Money Laundering is a Real Threat

With the advent of AI economic offences such as money laundering have become a real threat

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Money laundering has become real threat with advent of tech, AI: SC

With the advancement of technology and Artificial Intelligence, economic offences such as money laundering have become a real threat to the functioning of the financial system of the country, the Supreme Court said on Monday while dismissing the bail plea of an accused.

Dismissing the bail plea of an employee of Shakti Bhog Foods Limited in a money laundering case, a bench of Justices Aniruddha Bose and Bela M Trivedi said economic offences have serious repercussions on the development of the country as a whole.

“With the advancement of technology and Artificial Intelligence, the economic offences like money laundering have become a real threat to the functioning of the financial system of the country and have become a great challenge for the investigating agencies to detect and comprehend the intricate nature of transactions, as also the role of the persons involved therein.

“A lot of minute exercise is expected to be undertaken by the investigating agency to see that no innocent person is wrongly booked and that no culprit escapes from the clutches of the law,” the bench said.

It said the economic offences need to be visited with a different approach in the matter of bail.

“The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country,” the bench said.

The top court said when the detention of the accused is continued by the court, the courts are also expected to conclude the trials within a reasonable time, further ensuring the right of speedy trial guaranteed by Article 21 of the Constitution.

The apex court said the accused, Tarun Kumar, has to prima facie prove that he is not guilty of the alleged offence and is not likely to commit any offence while on bail.

“It cannot be gainsaid that the burden of proof lies on the accused for the purpose of the condition set out in the Section 45 (conditions for grant of bail) that he is not guilty of such offence. Of course, such discharge of burden could be on the probabilities, nonetheless in the instant case there being sufficient material on record adduced by the respondent showing the thick involvement of the appellant in the alleged offence of money laundering under Section 3 of the said Act, the Court is not inclined to grant bail to the appellant,” the bench said.

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Artificial Intelligence

Google Says AI Helped Beat Profit Expectations

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google ai profits

Google parent Alphabet says it remains committed to keeping costs in check, in another sign more layoffs are on the way at the tech titan.

Google parent Alphabet on Tuesday credited Artificial Intelligence with helping boost profits in the final quarter of last year.

Alphabet reported a profit of $20.7 billion on revenue of $86.3 billion, with strong  contributions from video-sharing platform YouTube and its cloud computing unit.

“Each of these is already benefiting from our AI investments and innovation,” Alphabet chief executive Sundar Pichai said in an earnings release.

Google ads brought in a total of $65.5 billion in the quarter, compared with $59 billion in the same period the prior year, according to the earnings report.

Ads served up at YouTube accounted for $9.2 billion in revenue, up from $8 billion in the final three months of 2022, earnings figures showed.

Some $9.2 billion was brought in by Google’s cloud computing unit, compared with $7.3 in the same quarter a year earlier.

The earnings come as Google, Microsoft, Amazon and other rivals competing in the hot field of AI face scrutiny from regulators in the US and Europe.

The US Federal Trade Commission recently launched a study of AI investments and alliances as part of an effort to make sure regulatory oversight can keep up with developments in artificial intelligence, and stop major players shutting out competitors in a field promising upheaval in multiple sectors.

“Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition,” said Lina Khan, head of the Federal Trade Commission, in a statement.

One major concern is that generative AI, which allows for human-level content to be produced by software in just seconds, requires a massive amount of computing power, something that big tech companies are almost uniquely capable of delivering.

Amazon — through its Amazon Web Services arm — Microsoft and Google are the world’s biggest providers of cloud-based data centers, which store and process data on a vast scale, in addition to being some of the world’s richest companies.

Microsoft has moved the fastest in the generative AI revolution with a reported $13 billion investment in OpenAI, the creator of ChatGPT.

Artificial Intelligence More Layoffs?

In another sign that there may be more layoffs on the way at Alphabet, chief financial officer Ruth Porat said in the earnings report that the tech giant remained “committed to our work to durably reengineer our cost base as we invest to support our growth opportunities.”

Pichai earlier this month warned employees that more layoffs are in store at the search engine giant as it focused on new priorities, including artificial intelligence.

“These role eliminations are not at the scale of last year’s reductions, and will not touch every team. But I know it’s very difficult to see colleagues and teams impacted,” Pichai said in an email to staff seen by AFP on Thursday.

“Many of these changes are already announced, though to be upfront, some teams will continue to make specific resource allocation decisions throughout the year where needed, and some roles may be impacted,” he added.

Google laid off around 12,000 people this time last year, about six percent of its workforce, in the face of inflation and rising interest rates.

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