IMF: Artificial Intelligence May Boost Growth in Europe but Increases Economic Pressure
Amman2 min read
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A paper from the International Monetary Fund (IMF) indicated that artificial intelligence (AI) could raise Europe's productivity by about one percent within five years, but it carries risks such as widening inequality gaps, putting pressure on electricity networks, and increasing dependence on foreign technology unless governments deepen economic integration.
The paper, prepared for an informal meeting of European Union finance ministers in Dublin on September 18 and 19, said that the benefits and costs of AI are likely to be unevenly distributed among countries, regions, and workers.
It added that completing the European Single Market would help spread the use of AI and its benefits more evenly across the EU's 27 countries.
The paper reflects concerns previously raised by former European Central Bank President Mario Draghi and the European Commission about the fragmentation of capital, labor, and energy markets in Europe limiting investment and innovation.
The IMF estimated that about 60 percent of workers in advanced European economies work in jobs highly affected by AI.
It said that while some may be able to increase their productivity through AI tools, others face the risk of being replaced as routine tasks are automated, especially in jobs where AI is likely to replace rather than complement labor.
The paper said that data centers in Europe already consume about three percent of the continent's electricity, and demand will rise sharply as AI use expands. Major tech hubs such as Frankfurt, London, Amsterdam, Paris, and Dublin are among the most vulnerable, as data center clusters there put pressure on local electricity networks.
The IMF said that to address this, the European Union should invest in cross-border electricity infrastructure and deepen the integration of the European energy market.
The paper also warned that Europe faces the risk of developing a new form of strategic dependency as the United States and China dominate the development of AI models. It said that Europe will need significant investments in its own AI sector to avoid relying on foreign technology.
It added that AI gains are also likely to be unevenly distributed among EU countries and within each country, as more advanced economies are expected to benefit more because they are more prepared for and exposed to this technology.
