Generative AI could lift Canada’s GDP by 8%: TD Economics

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A new report from TD Economics suggests that the transformative technology known as generative AI could help solve Canada’s persistently sluggish productivity growth — provided the country’s low AI adoption rates don’t keep it from realizing its full potential.

Economic analyst Anusha Arif and senior economist Rannella Billy-Ochieng estimate that generative AI could boost Canada’s GDP by as much as five to eight per cent over the next decade. “Canadian businesses have poor AI adoption rates relative to their U.S. peers. The absence of widespread adoption and commercialization of AI among businesses could stand in the way of Canada fully capitalizing on this nascent opportunity.”

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The report explains that generative AI differs from previous automation technologies in its ability to solve complex problems and mimic human cognitive abilities. Unlike past waves of innovation that automated routine tasks, generative AI enhances productivity by augmenting human capabilities, allowing for more creative and strategic thinking.

TD believes this technology can revolutionize industries by providing solutions that were previously unattainable, leading to significant advancements across various sectors.

“Cognitive machines have the potential to help workers perform more efficiently and could even augment the creation of innovative ideas,” the report says.

While fears of job losses due to AI remain, historical trends suggest they may be unfounded. According to the analysts, technological advancements have traditionally led to net job creation and increased demand for labour. Early evidence indicates that AI will complement, rather than displace, workers, offering a significant boost to economic growth. Canada’s high concentration of educated workers further supports an optimistic outlook, with many poised to transition to roles that leverage AI.

However, realizing AI’s full potential requires addressing challenges such as weak computing infrastructure and regulatory uncertainties. TD said that Canada must foster broader adoption across businesses to remain competitive in the global AI landscape.

“The potential for AI to boost economic growth starts with increased efficiency of output and extends to the acceleration of innovation, which helps to spur future productivity growth,” the report said.

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