AI productivity boom tempered by protectionist threat

The AI revolution should deliver substantial productivity gains in the coming decade, particularly in advanced economies. But with working age populations falling in key areas and China’s economy in structural decline, we expect global growth to slow compared to the past twenty years. The fracturing of the global economy into US and China-led blocs will prompt a gradual shift in trading and financial relationships, but there is a growing threat of a more extreme and damaging lurch towards protectionism. And as the forces which previously weighed on inflation and investment incentives go into reverse, we expect equilibrium interest rates to rise.

Note: Our long run forecasts dashboard is available here.