emerging
AI Drives Productivity and Growth
Artificial intelligence is projected to significantly impact economic growth, both through direct investment and productivity gains.
Themes
Timeframe
long-term
Detailed Analysis
AI is identified as a transformative technology with the potential to reshape the economic landscape. The report projects a significant boost to GDP growth from AI, driven by both increased investment in the technology and the resulting productivity gains. "Of these investments, AI is both the most far-reaching and the most accessible over our 10- to 15-year forecast horizon. We add a further 10bps boost to our growth forecasts this year to account for the impact of AI…for developed markets." While the initial impact of AI is primarily through capital deepening, the report anticipates that AI will eventually enhance total factor productivity, potentially leading to lower inflation in the long run. "Today, the growth impact of AI comes from capital deepening, but we expect it eventually to improve total factor productivity, putting downside pressure on inflation." This suggests that the transformative potential of AI extends beyond short-term gains to long-term structural changes in the economy.
Context Signals
AI investment is accelerating across economies.
Initial impact is through capital deepening, later through TFP.
Potential for a technology arms race between US and China.
Edge
Underestimation of AI's true impact due to uncertainties around adoption and integration.
Potential for AI to create new industries and transform existing ones.
Need for investors to adapt to the changing landscape and identify companies leveraging AI effectively.
