Macro Markets and Machines_The Economic and Market Transformation Driven by AI_GWM report - Flipbook - Page 29
Macro, Markets, and Machines
November 2025
scenarios), with policy rates sitting around 1.5 p.p. higher, based on an assumption of a large 1.5 p.p. annual
boost to TFP growth. However, these studies take a neutral stance on employment outcomes due to increased
AI adoption, while the response of labour markets could drastically affect the direction of prices (likely offsetting
upward price pressures in their estimates).
Section 4.3: The IMF’s Results Show a Modest, Unequal Global TFP Boost
In an April 2025 report, the IMF estimates the economic gains from AI under two different productivity growth
scenarios, which were defined by varying degrees of AI exposure, adoption depth and speed, and cost savings.
We focus on the IMF’s article due to its solid technical foundation and the fact that the authors present
estimates for a handful of regions as opposed to most other research that focuses on a single country (mostly
the United States) or region The IMF’s study highlights the possibility of uneven economic benefits from AI,
concluding that a higher starting point for AI exposure and preparedness means the United States and the
European Union stand to reap greater AI gains in comparison with emerging market economies.
In the low-TFP environment, one with “slower technology adoption and diffusion,” the IMF estimates that
global TFP would grow by 0.6% over five years and 0.8% over 10 years, while under high-TFP conditions that
“envision substantial productivity advances,” the paper estimates global TFP growth at 1.8% and 2.4% over
five and 10 years, respectively (all in comparison to their latest baseline economic projections). The IMF does not
present a central TFP scenario, possibly fearing it may be interpreted as the IMF’s view, but the halfway point of
the low and high simulations for global TFP gains relative to baseline sits at 1.2% growth over five years and 1.6%
growth over 10 years.
Section 4.4: AI Exposure, Preparedness, and Access Drive Cross-Country AI
Productivity Differences
The IMF’s results exhibit important regional differences in would-be productivity benefits from AI and thus
on the GDP gains that countries may capitalize on from increased global adoption of the technology (Exhibit
21). Their model estimates that the U.S. would experience low- and high-TFP growth boosts of 1.5% and 4.3%,
respectively, over a 10-year period, significantly above the global estimate of 0.8% and 2.4% and around double
China’s estimated gains and well beyond Low-Income Countries (LIC) whose TFP benefits would be closer to a
low-high 0.5-1.0% range. The E.U., Switzerland, and other advanced economies would experience comparable,
albeit somewhat smaller, productivity boost than the U.S. that allows them to keep pace.
Exhibit 21 – Low- and High-TFP Shock Scenarios’ 10-Year Cumulative Impact on Productivity
Notes: CHI = China. EMA = Emerging Market Economies Asia, Central Asia, Russia, etc. EML = Emerging Market Economies Latin America, the
Middle East, Africa, etc. EUS = EU and Switzerland. LIC = Low-Income Countries. OAD = Other Advanced Economies.
Sources: IMF; Scotia Wealth Management.
Scotia Wealth Management
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