EY has published a new report examining the impact of Generative AI (GenAI) Technology on the labor market and the global economy. The report highlights that artificial intelligence and GenAI will contribute $440 billion in economic growth across Europe, the Middle East, and Africa (EMEA) over the next decade, driving transformation in sectors ranging from the workforce to GDP. EY’s comprehensive report, focused on the EMEA region, underscores that this technology is not only reshaping businesses but also fundamentally transforming national economies.
EY, a global leader in consulting, assurance, strategy, corporate finance, and tax services, reveals in its report that GenAI technology will influence everything from micro-level workforce dynamics to macro-economic changes. The report emphasizes that the economic impact of AI and GenAI in the EMEA region will deepen over the next ten years and vary across different regional markets.
New Professions and Economic Growth Driven by AI
- The report indicates that Generative AI Technology will drive the emergence of new job roles in the labor market, influencing investment trends across Western Europe and East Africa.
- GenAI is expected to have long-term effects on productivity, inflation, and interest rates, shaping macroeconomic variables over time.
The Labor Market is Undergoing Transformation
- According to the EY report, GenAI technology has the potential to reshape the labor market significantly. It is expected to transform skilled professions that involve decision-making and data analysis, leading to new job roles rather than job losses.
- In Western Europe, approximately 5% of existing job roles are projected to become automated over the next decade. However, new professions requiring human creativity and social interaction will emerge.
- In other EMEA regions, the adoption of AI applications will be influenced primarily by economic factors, potentially leading to a slower rate of adoption.
Investment in GenAI Fuels Economic Growth
- Western Europe continues to lead in GenAI investments, with AI adoption rates expected to reach 77% by 2033.
- ICT investments in Western Europe are projected to increase regional GDP by 1.7%, contributing 0.8% to 1.9% to overall economic growth.
- Across the EMEA region, Generative AI is expected to drive $440 billion in economic growth by 2033.
Total Factor Productivity (TFP) is Increasing
- GenAI is set to boost operational efficiency and accelerate innovation, leading to an increase in Total Factor Productivity (TFP).
- In Western Europe, TFP is expected to rise between 0.9% and 1.8% by 2033.
- Central and Eastern Europe will benefit from increased external demand from Western Europe, providing a regional economic advantage.
Impact on Inflation and Interest Rates
- Investments in AI and automation will have significant implications for economic policy and financial markets.
- Inflationary impact is estimated to be between 0.1% and 0.25% in most regions, but it could reach as high as 0.8% in Central and Eastern Europe.
- Interest rates are expected to be influenced by rising demand, AI-driven productivity gains, higher investment levels, and inflationary pressures.
Sectoral and Regional Impacts are Taking Shape
- The influence of GenAI on global trade and sectoral productivity is becoming increasingly clear.
- Industries deeply integrated into global trade networks will gain a competitive advantage from AI-driven cost reductions.
- Sectors such as healthcare, education, government, and professional services are expected to benefit the most from AI adoption.
- By 2033, GenAI is projected to increase global GDP by 1.4%, with Western Europe, North America, and advanced Asian economies experiencing the highest growth.
