IMF: AI Could Boost Europe’s Productivity Amid Economic Pressures

A paper issued by the International Monetary Fund (IMF) indicated that artificial intelligence could boost Europe’s productivity by around 1 percent over five years, but it carries risks such as widening inequality gaps, straining power grids, and increasing reliance 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, stated that the benefits and costs of AI are likely to be distributed unevenly across countries, regions, and workers.

The paper reflects concerns previously raised by former European Central Bank President Mario Draghi and the European Commission that fragmented capital, labor, and energy markets in Europe constrain investment and innovation.

The IMF estimated that around 60 percent of workers in advanced European economies are employed in jobs highly exposed to AI.

It noted that while some workers may be able to increase their productivity through AI tools, others face the risk of being displaced as routine tasks are automated, particularly in roles where AI is more likely to replace rather than complement labor.

The paper stated that data centers in Europe already consume around 3 percent of the continent’s electricity, and demand is expected to rise sharply as AI usage expands.

Major technology hubs such as Frankfurt, London, Amsterdam, Paris, and Dublin are among the most vulnerable areas, as their concentrations of data centers are placing pressure on local power grids.

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 Europe would need substantial investments in its own AI sector to avoid reliance on foreign technology.

It added that AI gains are also likely to be distributed unevenly among EU member states and within each country, with more advanced economies expected to benefit more because they are better prepared for and more exposed to the technology.