JCER/Nikkei Consensus Survey on Asian Economies

Japan Center for Economic ResearchJuly 3, 2023

Economists: Generative AI Could Boost Productivity
Benefits Seen for Healthcare, Education, but Job Concerns Persist
Masashi Uehara, Principal Economist
Highlights]

A special question of the thirtieth quarterly consensus survey on Asian economies asked
Economists and analysts from Indonesia, Malaysia, the Philippines, Singapore, Thailand andIndia about the impact of “generative AI” technologies such as ChatGPT on their respectiveeconomies. Out of the 39 respondents who participated in the survey, 18 provided theiranswers on generative AI.
The majority of respondents (14) evaluated the impact positively, expressing highexpectations for increased productivity through task automation. The impact was noted
across a wide range of industries, with particular emphasis on healthcare and education.
Only two respondents, one from India and one from Indonesia, shared broadly negative
views of the new technology. Both India and Indonesia have relatively high youth (15-24age) unemployment rates. There were also many voices outside of these countries pointing
out the negative impact of generative AI on employment.

The Japan Center for Economic Research and Nikkei conducted the thirtieth quarterly
consensus survey on Asian economies in June. As a special question, this survey asked economists
and analysts from five ASEAN countries (Indonesia, Malaysia, Philippines, Singapore, andThailand) as well as India about the impact of globally debated “generative AI” technologies, such as
ChatGPT, on their respective economies.
Participants were asked about both positive and negative impacts of generative AI on eachcountry's economy, as well as whether the overall effect would be positive or negative in total. Ofthe 39 respondents who participated in the survey, 18 responded to the special question. Amongthese 18 respondents were five from India, three each from Indonesia, Malaysia, and Singapore, andtwo each from Thailand and the Philippines. Notably, 5 out of 7 respondents from India provided
answers, suggesting a high level of interest in generative AI in the country. Sam Altman, the CEO ofOpenAI, the company behind ChatGPT, visited India in June 2023 and held talks with Prime
Minister Narendra Modi. (In Asia, Altman has also visited Indonesia, Singapore, China, SouthKorea, and Japan.)
14 respondents answered that the impact would be positive in total, while 2 answered that it
would be negative. The majority express high expectations for increased productivity through task
automation, with positive possibilities identified across a range of industries, particularly healthcare
and education.
Only two economists, one from India and one from Indonesia, responded with an overall
negative view. Both India and Indonesia have relatively high youth (15-24 age) unemployment rates(Graph 1). However, there were also many voices outside of these countries pointing out thenegative impact of generative AI on employment.

Graph 1 Unemployment Rate in Asian Countries (2022)
25%

20151050

Unemployment, youth total

Unemployment, total(Source) World Bank, ILO estimates

Generative AI Could Boost Productivity
Text generative AI, such as ChatGPT and BART, and image generative AI, exemplified by
Stable Diffusion and Midjourney, have gained worldwide attention as significant innovations withthe potential to impact creative fields. They hold the potential to enhance efficiency in office tasks
that were previously challenging to automate and enable rapid generation of a large volume ofillustrations and photos.
“There is a common belief that generative AI will help play a critical role in pushing AI
innovation and investment in the coming decade,” points out Bidisha Ganguly of Confederation ofIndian Industry. He adds that “the latest generative AI applications, including ChatGPT, can performa range of tasks, such as the reorganization and classification of data.” “It may stimulate more ideas
and thoughts [to encourage] people to think more deeply and more critically. People should[become] more creative in thinking and finding more solutions to survive,” says Dendi Ramdani ofBank Mandiri in Indonesia.
Many economists point to the positive impact of “improved productivity” on economicactivities.
“AI can augment humans and so improve productivity sharply,” says Manu Bhaskaran ofCentennial Asia Advisors in Singapore. Kenanga Investment Bank’s Wan Suhaimie in Malaysia ishopeful that the new technology can “increase efficiency, given that certain business processes canbe automated with AI.” He notes that “this will also allow for more cost-saving, as automation canreduce redundant work structures, allowing more productivity for the country as a whole.” Ruben
Carlo Asuncion of Union Bank of the Philippines also thinks generative AI “increases laborproductivity and [brings] more innovation.”
Healthcare and Education in Focus
The fields that are expected to bring about improved productivity are diverse, with many
respondents focusing on healthcare and education.
Anshuman Khanna of Federation of Indian Chambers of Commerce and Industry says: “AI has
useful applications—which are already being used for healthcare diagnosis and treatment, education
content quality upgrades, agricultural crop yield optimization, and manufacturing productivity
increases, [as well as by] the IT sector, start-ups, etc.”-2-Tirthankar Patnaik of National Stock Exchange of India judges that “generative AI has somevery crucial applications in the field of science, healthcare, and education, and can help significantly
accelerate the process of scientific research and innovation by reducing cost and supporting better
learning outcomes.”
Punit Srivastava of Daiwa Capital Markets, India picks three sectors that should benefit from
ChatGPT: education system, customer services, and the IT sector. Dendi Ramdani of Bank Mandiri
in Indonesia acknowledges that “some tasks based on routine may not survive,” and maintains that“the education system and curriculum should be reformed…education should make students morecreative in producing new ideas.”
According to UOB Kay Hian Securities’ Mohd Sedek, “AI has benefited business, education,and healthcare.” Regarding education, he sees the possibility for academic institutions to offer “amore customized teaching and learning approach,” adding that “there are also opportunities toimprove academics' lives to aid and support administrative obligations such as reporting and lessonplanning.” Regarding the healthcare sector, he sees potential for “health democratization,” meaning“the ability of patients to make more decisions about their own health as a result of the widespread
availability of health knowledge.”
In Thailand, Lalita Thienprasiddhi of Kasikorn Research Center also claims that generative AI
can contribute to “increased productivity of businesses [and] support new S-curve industries,” agroup of industries that the Thai government is trying to nurture with the aim of realizing aninnovation-led economy. The five targeted sectors include healthcare and biofuels, as well as digital,
aviation, robotics, and automation.
Negative Impact on Employment
Many respondents highlighted the negative impact of “employment reduction.”“India faces a major challenge of skilling and reskilling its workforce to continue adapting totechnological advances,” says CRISIL’s Dharmakirti Joshi, who gives a broadly negative assessmentof generative AI’s impact. “India has a large and growing workforce that needs to be gainfullyemployed for the economy to achieve its potential,” he writes. “However, a large proportion of theworkforce remains inadequately skilled.” Daiwa Capital Markets India’s Punit Srivastava also points
out that “sectors like content creation, advertising, the IT training industry, etc. may face reduced
employment opportunities.”
In Indonesia, Josua Pardede of Permata Bank thinks the overall impact is negative: “AsIndonesia still needs to accommodate [its working] age [population] in the short term, accelerating
automation could lead to lower labor absorption in Indonesia.”
In the Philippines, Mitzie Irene Conchada of De La Salle University warns that “there should becaution as we proceed in embracing and adopting generative AI. The transition will mean the loss ofsome entry-level jobs.” She adds that “another negative impact could be a job mismatch, wheresome fresh graduates could find themselves inadequate or lacking in skills to cope with the use ofgenerative AI in the workplace.”
In Singapore, Song Seng Wun of CIMB Bank says that the “local labor market and businesses
must adapt (quickly?) given the fast-changing generative AI landscape, because it is already starting
to work its way through business and society. There will be those who cannot and will not!”On the other hand, Randolph Tan of Singapore University of Social Sciences argues thatgenerative AI will benefit Singapore, saying: “As an advanced economy with a majority of theworkforce in professional, managerial and executive occupational roles, ChatGPT provides
significant potential for strengthening the capacity of Singapore's small workforce.”-3-Copyright Infringement, Fake Information Emerge as Additional Problems
Some economists called attention to the need for legal frameworks and measures to address
issues such as copyright infringement.
Vincent Loo Yeong Hong of KAF Research in Malaysia highlights “increasing incidences ofplagiarism and IP rights issues.” The Habibie Center’s Umar Juoro states that ChatGPT “encourages[people] to duplicate the work of others and discourages original work.”UOB Kay Hian Securities’s Mohd Sedek in Malaysia raises questions: “What are theintellectual property implications of such a technology? Do we have sufficient laws in place toaddress unintended consequences? The existing legislative frameworks are not yet ready to address
them.”
Some voiced concerns about the issue of “fake information” or “hallucination” generated by AI
systems.
Wan Suhaimie of Kenanga Investment Bank in Malaysia says that “there could be issues of
information inaccuracy and misinformation, given that AI might not differentiate between real andfake news or information, and this is crucial for a country's political stability.” He concludes that AIcould “increase the risk of malicious content, as AI can generate false imitations [which] could also
impact national security interests.”-4-