How might AI impact the economy

 

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  1. Potential Economic Gains:

    • AI has the potential to contribute significantly to global economic activity. According to research by the McKinsey Global Institute, by 2030, AI might deliver additional global economic output of around $13 trillion, boosting cumulative global GDP by approximately 16 percent compared to today.
    • This translates to an additional 1.2 percent annual GDP growth. These gains are substantial and could reshape the economic landscape.

  2. Adoption and Absorption:

    • Companies are likely to adopt various AI technologies at different rates. These technologies include computer vision, natural language processing, virtual assistants, robotic process automation, and advanced machine learning.
    • By 2030, it is estimated that about 70 percent of companies might have adopted at least one type of AI technology. However, less than half of them will have fully absorbed all five categories of AI tools.
    • The adoption and full absorption of AI technologies might occur relatively rapidly, similar to other technological shifts.

  3. Challenges and Barriers:

    • Despite the potential gains, several challenges exist:
      • Labor Displacement: AI applications may execute tasks currently performed by humans, leading to lower labor demand and potentially reduced wages.
      • Widening Gaps: Adoption of AI could widen gaps among countries, companies, and workers. Ensuring equitable distribution of benefits is crucial.
      • Transition Costs: There will likely be costs during the transition period, which need to be factored into any estimate.
      • Technical Challenges: Organizations must overcome technical hurdles to fully integrate AI technologies.

  4. Job Impact:

    • In advanced economies, about 60 percent of jobs may be impacted by AI. Roughly half of these exposed jobs may benefit from AI integration, enhancing productivity.
    • However, for the other half, AI applications may replace key tasks currently performed by humans, potentially leading to lower labor demand and reduced hiring2.

  5. Gradual Emergence:

    • The economic impact of AI may emerge gradually and become visible over time.
    • Netting out competition effects and transition costs, AI has the potential to drive substantial economic growth, but its effects may not be immediate.

In summary, AI’s impact on the economy is multifaceted. While it promises significant gains, addressing challenges and ensuring equitable distribution of benefits are essential for a successful AI-driven future.

 

 This article is not advice and has not been prepared in accordance with legal requirements designed to promote the independence of investment research – no recommendations are given in the buying, selling or holding of any investments. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.