GDP of Ireland could receive a near €50 billion boost from AI

Artificial Intelligence could see Ireland’s GDP raised by just under €50 billion in the next 12 years. A new study also finds that the technology could significantly aid both public and private sector productivity, and even boost jobs in the Republic.

A new report from PwC has stated the case for Artificial Intelligence (AI) in Ireland. According to the Big Four professional services firm, AI could add 11.6% - or €48 billion - to Ireland's GDP by 2030. Analysts calculated that this projected impact will be driven largely by the possibility for product enhancements (7.9% of GDP in 2030) to increase productivity. The time saved by intelligent machinery could deliver improved levels of quality and product diversity across all industrial sectors.

While the figures forecast that the potential for AI to impact the Irish economy will be slightly lower than the global average of 13.8% by 2030 ($15.7 trillion), the potential of the technology remains slightly higher than in other Northern European (9.9% by 2030 and $1.8 trillion) and Southern European (11.5% by 2030 and $0.7 trillion) economies. The height of the global average is boosted significantly by regions such as China and Developed Asia, which generally see poor productivity, something that AI could change more radically than in the more mature production culture of Europe and the US.

According to the study, the varied gains between sectors of Ireland’s economy could be as little as 4% or as much as 22% increases in GDP. However, all parts of the market ultimately stand to see some improvement. On top of this, the report suggests that it will not merely be commercial segments, such as the retail, wholesale trade, accommodation and food services sectors that are best positioned to seize on this boon. As is the case across many European economies of Ireland’s scale, the health, education and public services sectors will be most impacted by 2030 – something which will likely be seen as an attractive prospect for public bodies which have suffered from sustained spending cut-backs since the global recession ten years ago.

PwC contends that health, education, public services and arts could see around a 20% boost to their GDP thanks to AI. The research also indicates the highest potential for product enhancements in the health sector, alongside the automotive and financial services sectors. This is in line with several studies which have suggested that the healthcare system of the neighbouring UK would also benefit substantially from the use of AI, with an ageing population currently putting major strain on the NHS.

Augmentation of labour

It would be remise of any document compiled on the potential of automation and AI to ignore the potential impact of technology on jobs. In 2017, a number of studies suggested gloomy outlooks for employment following automation, with one even suggesting that only 19% of jobs lost to AI would be replaced elsewhere. Here, PwC’s study differs, delivering a significantly sunnier forecast for the implementation of innovations.

The adoption of ‘no-human-in-the-loop’ technologies will mean that some jobs will inevitably become redundant, the researchers admitted, but others will be created by the shifts in productivity and consumer demand emanating from AI, and through the value chain of AI itself.

Along with jobs in the development and application of AI, the technologies will need to be built, maintained, operated and regulated. In most cases, these jobs will be conducted by humans. This, combined with Ireland’s strong business and regulatory environment, suggests that AI will also lower the number of jobs being outsourced. The increased productivity through augmentation of labour and automation of some roles will also drive gains, but to a lesser extent (3.7% by 2030) when compared to total consumption-side enhancements (7.8% by 2030). While these are lesser benefits, they also stand to increase consumer spending power and, in the long term, to stimulate additional businesses entering the Irish labour market, leading to higher quantities of production, more affordable goods, and at least a neutral impact on jobs in Ireland in the long term, if not a net positive one.

PwC Ireland Digital Director Ronan Fitzpatrick said the "potential size of the AI prize on Ireland’s economy is huge, with significant but varied gains across all sectors, having the potential to transform businesses.”

Fitzpatrick added, "The impact on productivity could be competitively transformational and disruptive. Businesses that fail to apply AI could quickly find themselves being undercut on price and turnaround times, and may lose significant market share as a result."