How GenAI will change the global economy | Oxford Economics Skip to content
Research Briefing | May 8, 2024
Generative AI has the potential to significantly improve the medium-term growth prospects of the economy, and it comes at an opportune time, as an ageing and less productive workforce becomes less supportive of growth.
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Our model suggests that the impact of GenAI on medium-term growth will be significant. Using the United States as a case study, we project that it could add 1.8% to 4% to U.S. GDP by 2032, depending on the speed of adoption. Other countries with less flexibility and knowledge should benefit, but to a lesser extent. The benefits could be even greater if GenAI not only helps automate tasks but also leads to greater innovation. However, at this stage, we are skeptical of any lasting productivity gains. We believe that more substantial productivity gains will come from automating a broad range of tasks. Economy-wide benefits will be realized eventually, but not immediately. We believe that the impact of GenAI is likely to be a dampener on global inflation in the medium term, as productivity gains are unlikely to quickly catch up with wage growth. In contrast, AI-related investments could boost demand and increase cost pressures.
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