Global GDP will be 14 percent higher in 2030 as a result of artificial intelligence (AI), a collective term for computer systems that can sense their environment, think, learn and take action in response to what they’re sensing and their objectives. The projected increase in GDP is the equivalent of an additional $15.7 trillion. This makes it the biggest commercial opportunity in today’s fast-changing economy, according to Sizing the prize, a new research by PwC.
Drawing on a detailed analysis of the business impact of artificial intelligence, Sizing the prize outlines the economies that are set to gain the most from AI.
The expected contribution by AI of $15.7 trillion to the global economy in 2030 will be more than the current output of China and India combined.
Labor productivity improvements are expected to account for more than half of all economic gains from AI over the period 2016-2030. Increased consumer demand resulting from AI-enabled product enhancements will account for the rest. The greatest economic gains from AI will be in China (26 percent boost to GDP in 2030) and North America (14.5 percent boost), equivalent to a total of $10.7 trillion and accounting for almost 70 percent of the global economic impact.
North America will experience productivity gains faster than China initially, driven by its readiness for AI and the high fraction of jobs that are susceptible to replacement by more-productive technologies.
China will begin to pull ahead of the US’ AI productivity gains in 10 years, after it catches up on a slower build-up to the technology and expertise needed.
Europe and Developed Asia will also experience significant economic gains from AI (9-12 percent of GDP in 2030).
Developing countries will experience more modest increases (less than 6 percent of GDP) due the much lower
rates of adoption of AI technologies expected (including Latin America, Africa).
“The analysis highlights how the value of AI enhancing and augmenting what enterprises can do is large, if not larger than automation,” comments Anand Rao, global leader of Artificial Intelligence at PwC. “It demonstrates how big a game changer AI is likely to be – transforming our lives as individuals, enterprises and as a society.”
Included in the analysis, the PwC AI Impact Index pinpoints three business areas with the greatest AI potential in each of eight sectors. Areas identified include image-based diagnostics, on-demand production and autonomous traffic control.
Overall, the biggest absolute sector gains will be in retail, financial services and healthcare as AI increases productivity, product value and consumption. By 2030, an additional $9 trillion of GDP will be added from product enhancements and shifts in consumer demand and behavior, as AI-driven consumption gains overtake those of productivity.
Gerard Verweij, Global Data & Analytics Leader, PwC, comments:
“No sector or business is in any way immune from the impact of AI. The impact on productivity alone could be competitively transformational and even disruptive. Businesses that fail to apply AI could quickly find themselves being undercut on turnaround times, as well as costs and experience, and may lose a significant amount of their market share as a result.”
“The big challenge is how to secure the right talent, technology and access to data to make the most of this opportunity.”
The analysis underlines how the scale of the opportunity of AI needs to be underpinned by both more robust governance and new operating models to realize its full potential. A recent paper from PwC UK on Responsible AI warned that effective controls need to be built into the design and implementation phase to ensure AI’s positive potential is secured, and address stakeholder concerns about it operating beyond the boundaries of reasonable control.
In the Philippines, AI is among emerging technologies in the Philippine Development Plan 2017-2022, with the government engaging in more collaborative research and development activities and investing in infrastructure build-up. Interestingly, while the research revealed that labor productivity improvements are expected to provide more than half of the economic gains from AI, locally, there are concerns raised about the impact of AI on the employment of Filipinos, particularly in the manufacturing sector.
AI is indeed a source of both excitement and apprehension. Ultimately, sizing the prize of AI for businesses and even the country will depend largely on how much we are willing to embrace this game changer and how prepared we are to address the disruptions it brings.
Catherine H. Santos is a partner from Assurance and the Assurance Transformation Partner of Isla Lipana& Co./PwC Philippines. Email your comments and questions to email@example.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.