Page 17 - Policy & Economic Report - July 2025

POLICY AND ECONOMIC
ROEILPO&RGTAS MARKET

Figure 7: Flash PMI Output Indicators for G4 Advanced Economies (US, Eurozone, UK and Japan)

Source: S&P Global PMI

2. Developing Economies must invest now to harness the benefits of Artificial Intelligence - IMF

Artificial intelligence (AI) is emerging as a transformative force for developing economies, with the
potential to accelerate productivity growth, improve public service delivery and create higher-quality
employment. According to the International Monetary Fund (IMF), while advanced economies currently
enjoy significant advantages in AI adoption, many developing countries still have an opportunity to
harness the technology by investing in the essential foundations required for widespread deployment.
The IMF argues that AI should be viewed not merely as a technological innovation, but as a long-term
development strategy capable of supporting inclusive economic growth and narrowing productivity gaps.

The IMF highlights Sub-Saharan Africa as an example of both the opportunities and challenges associated
with AI adoption. At current levels of digital readiness, AI is expected to contribute only 0.2 per cent to
the region's GDP over the next decade. However, with accelerated investment in electricity infrastructure,
affordable broadband connectivity, digital skills and supportive policy frameworks, AI could increase
regional output by approximately 4 per cent, representing a twenty-fold improvement over the current
trajectory.

Realizing these gains will require substantial investment in the digital ecosystem. Reliable electricity
remains one of the most significant constraints, with a large share of the region's population still lacking
dependable power supply. Internet access also remains well below the global average, limiting the ability
of businesses, governments and households to adopt AI-enabled solutions. The IMF emphasizes that
developing economies do not necessarily need to build frontier AI models, but rather develop the capacity
to adopt, adapt and deploy existing technologies at scale through improved infrastructure, regional data
centers and enhanced digital connectivity.

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