According to a study conducted by McKinsey, generative AI has the potential to add up to $4.4 trillion annually to the global economy. This significant economic contribution is expected to reshape productivity across various sectors, provided there is continued investment in this technology. The upper end of the estimated economic impact range, ranging from $2.6 trillion to $4.4 trillion, surpasses the entire GDP of the UK, which stood at $3.1 trillion in 2021. McKinsey’s report, titled “The Economic Potential of Generative AI: The Next Productivity Frontier,” indicates that generative AI could contribute an additional 15% to 40% of economic value to the estimated $11 trillion to $17.7 trillion that non-generative AI and analytics are projected to unlock.
McKinsey’s analysts highlight that around 75% of the potential value generated by generative AI use cases falls within four key areas: customer operations, marketing and sales, software engineering, and research and development. Generative AI refers to a type of AI system that can create text, images, or other media by leveraging neural networks to identify patterns and structures in existing data, enabling the generation of new and original content.
The study examined 63 use cases across 16 business functions, showcasing how generative AI can address specific challenges and produce measurable outcomes. Examples of such applications include supporting customer interactions, generating creative content for marketing and sales, and even drafting computer code based on natural-language prompts.
Investment in generative AI has gained momentum, with over $2 billion invested in the sector through 110 deals in 2022 alone, according to Goldman Sachs. The investment bank estimates that AI has the potential to automate approximately 25% of current work tasks in the United States and Europe, with high-skill, non-routine jobs in legal and financial operations being particularly susceptible to automation.
While AI’s rapid advancement is expected to automate tasks and enhance productivity, experts emphasize the need for regulations to keep pace with the industry’s development. US President Joe Biden recently met with industry leaders to discuss the risks and promises of artificial intelligence. In response, major AI companies, including Microsoft and Google’s Alphabet, committed to participating in independent public evaluations of their systems.
As the industry continues to evolve, estimates regarding the economic potential of generative AI vary. In April, Goldman Sachs stated that the sector could drive a 7% increase in global GDP, amounting to nearly $7 trillion, while also boosting productivity growth by 1.5 percentage points over a 10-year period.
Despite uncertainties, generative AI’s ability to generate human-like content and facilitate communication between humans and machines represents a significant advancement with potentially profound macroeconomic effects, as highlighted by economists at Goldman Sachs.
