The International Monetary Fund (IMF) chief has called for deeper integration among Asian economies to help the region prepare for heightened global trade tensions and policy shocks.
Speaking at the “Asia in 2050” conference held in Bangkok on Thursday, IMF managing director Kristalina Georgieva said in a multipolar world, trade is affected by one policy shock after another. Strengthening regional integration could help mitigate uncertainties and reduce the impact of non-tariff barriers, she said.
Economic growth in Asia has been driven partly by exports since the 1960s. However, rising geopolitical tensions and shifts in trade policies are creating new uncertainties. Despite these challenges, global trade will continue to adapt, said Ms Georgieva.
“Trade is like water. When you put an obstacle in its way, it finds another route,” she said, adding closer regional trade links could raise Asia’s GDP by around 1.8% over the long term.
Ms Georgieva also highlighted digital connectivity as a major opportunity for the region. Asia leads the world in mobile broadband subscriptions, providing a strong foundation for digital payments and cross-border financial services.
The IMF plans to highlight Asia’s leadership in digital payments at its upcoming annual meetings, she said.
The adoption of artificial intelligence (AI) could further enhance regional connectivity and support economic growth. Asian economies are already emerging as leaders in both the development and adoption of AI technologies, said Ms Georgieva.
According to an IMF analysis, Singapore ranks at the top of its AI preparedness index, while China and South Korea are leading in AI adoption and model development.
Meanwhile, India is playing a key role in expanding access to the technology.
Other countries across the region, including Thailand, Indonesia and Malaysia, are advancing economic reforms, including new out-of-court restructuring mechanisms aimed at helping financially distressed firms recover more quickly, she said.
Labour development will be critical. Demand for both high-skilled and low-skilled jobs may increase, while many middle-income roles could face disruption.
The impact could be particularly significant for entry-level positions, which often involve routine tasks that are easier to automate, said Ms Georgieva.
“We are particularly concerned about entry-level jobs and what automation could mean for young people,” she said.
Moreover, demographic trends are expected to compound labour market challenges, noted the global lender. Asia is ageing faster than any other region in the world. By 2050, the number of Asians 65 or older is expected to double.
Some countries such as Japan have aged populations, while China and South Korea are ageing rapidly. In contrast, Bangladesh and India will continue to have relatively young and growing populations.
As a result, policy responses will need to differ across the region, with some countries focusing on increasing labour force participation while others prioritise job creation, said Ms Georgieva.
Technological change and demographic shifts are expected to drive more employment in the services sector, ranging from AI-enhanced professional work to elderly care services.
Despite these challenges, she expressed optimism about Asia’s long-term economic prospects.
Many countries in the region remain concerned about the risk of falling into the middle income trap, where growth slows before reaching advanced economy status. Asia has the potential to overcome that challenge, said Ms Georgieva.
“By 2050, I expect to see many more Asian countries joining the family of advanced economies,” she said.