The potential risks of artificial intelligence on the financial markets and economy haven’t been fully realized yet—and they might not be until an economic downturn, which AI could cause to accelerate into a massive crisis, said IMF’s First Deputy Managing Director Gita Gopinath at an AI summit in Switzerland recently.
When it comes to AI’s potential risks, much has been discussed about security, privacy and misinformation, Gopinath said, but there hasn’t been enough conversation about how it could exacerbate the next recession through disrupting financial markets, supply chains and labor markets.
A downturn might lead companies to replace workers with automation, particularly in advanced economies where 30% of jobs are at high risk of AI substitution. In the financial markets, AI could perform poorly when the set of circumstances its complex models have been trained on change for the worse. When it comes to supply chains, again, model that are trained on “stale data” could cause inaccuracies in how much inventory to hold and produce, leading to supply chain breakdowns.
“We need governments, we need institutions and we need policymakers to move quickly on all fronts, in terms of regulation, but also in terms of preparing for probably substantial disruptions in labor markets,” Gopinath said.
