Eurozone: GenAI will boost growth, but it’s no silver bullet | Oxford Economics Skip to content
Research Briefing | September 5, 2024
Our baseline forecast assumes that generative artificial intelligence (GenAI) will boost euro area GDP levels by 1.4% over the next 15 years, mainly through stronger labour productivity growth and investment and R&D spending in the development and application of GenAI, which will generate a second round of benefits through higher incomes and increased consumer spending.
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We argue that immediate productivity gains from GenAI will be concentrated in the services sector, but high value-added manufacturing will also benefit. This should favour large industrial sectors in some euro area economies, but the euro area is likely to take a stricter regulatory approach to GenAI, and weaker capital markets could stifle GenAI investment, adoption and innovation. We also expect significant effects on the labour market. Although automation will make some jobs obsolete, the impact will not necessarily be negative, as technology booms typically create more jobs than they destroy. Moreover, the euro area’s subdued labour market could benefit from increased flexibility, and automation would help address the weak demographic outlook. However, the final economic impact is highly uncertain and will depend on the speed and scope of adoption, the euro area’s international competitiveness and policy responses such as subsidies and regulations. The euro area is well poised to benefit from GenAI, but will likely lag behind the US and China. Return to Resource Hub
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