Before AI gains materialize, governments will have to deal with a ‘policy tradeoff,’ Moody’s says: How to handle the massive spending and debt risk

Before artificial intelligence supercharges global productivity, governments will have to deal with an unfortunate reality: The long-awaited economic windfall may be years away, while the bills are coming due now. 

Listen to the optimists, and the AI-driven economic boom is at the doorstep. The Penn Wharton Budget Model projects AI will add 1.5% to GDP and productivity over the next decade. Goldman Sachs says it could add up to three percentage points to productivity every year. By the mid-2030s, AI might increase work output by 20%, according to Vanguard.

For Moody’s Ratings, the global AI productivity boom will be worth 1.5% annually, averaged out across 106 countries, according to a Thursday research note. But in the case of economic growth, governments might have to spend money to make more of it down the line. AI could have significant upsides for productivity, but countries will first have to navigate a complicated and expensive landscape as they create digital infrastructur...