Australia AI Boom May Revive Productivity, CBA Says, Shares Gain
The Commonwealth Bank of Australia says Australia has become the world’s third-largest AI investment destination behind the US and China, an outcome that will boost productivity in an economy currently struggling with a low potential growth rate and high inflation.
CBA’s updated forecasts show Australia’s data center pipeline is close to 6 gigawatts, or A$150 billion, according to a research note published on Monday by economists led by Luke Yeaman; This means that installed capacity could more than triple in the period until 2030.
Shares in Australian data centers jumped after the report, with Goodman Group gaining 6.9%, its biggest gain since December 23. NEXTDC Ltd., Megaport Ltd., which partnered with OpenAI last December to create a A$7 billion large-scale computing cluster in Sydney. It increased by 7.2%. Macquarie Technology Group Ltd. It increased by 7.1%, while DigiCo Infrastructure increased by 3.1%. The 200-share benchmark ASX index rose 1.8%.
Australia’s productivity performance is among the poorest in the developed world, leaving the economy vulnerable to inflation when growth rises above 2%. This fragility helps explain why the Federal Reserve became the first major monetary authority globally to raise interest rates this year.
But Australia is diversifying its AI investments away from other global competitors:
CBA considers a productivity increase of 0.8-1.0 percent per year as a result of the AI boom to be a “safe estimate.” The bank recently upgraded Australia’s potential growth rate to 2.1%.
“If AI can deliver a sustainable increase in productivity and trend towards GDP growth of up to 1 percentage point per year, this will significantly improve economic and market outcomes,” Yeaman said. If realized, he said AI could see Australia’s potential growth rate “rise to around 3% in coming years”.
RBA Governor Michele Bullock said last week that boosting productivity growth was key to ensuring low and stable inflation. The government will announce a budget in May and pressure is mounting on the government to rein in spending and take efficiency-boosting measures.
The country’s Productivity Commission estimates that AI-related labor productivity growth will be around 0.4 percentage points per year, putting Australia in the lower forecast range.
“We think this figure is a bit pessimistic, but we agree that Australia will struggle to reap the full benefits that AI has to offer,” Yeaman said. “Australia is not the United States. Our economy has long-standing structural features that often prevent us from being at the cutting edge of adopting new technology and business practices.”
With the help of Carmeli Argana.
This article was generated from an automated news agency feed without modifications to the text.
