AI and the euro area economy in World Economy News 25/03/2026 Artificial intelligence (AI) stands out as a potentially-transformative general-purpose technology (GPT).[ Like electricity or the internet before it, its potential lies not in any single application but its capacity to reshape entire production processes, business models and economic structures across the economy. The AI technological frontier has advanced at a remarkable pace, progressing from narrow machine-learning systems capable of pattern recognition to large language models and generative AI platforms that can perform complex cognitive tasks. And the frontier keeps shifting. With agentic AI, the technology may increasingly act as an independent economic agent rather than a technology that merely augments human effort. What distinguishes AI from earlier revolutionary technologies is its scope. Previous general-purpose technologies, from steam power to electrification to information and communications technology, primarily raised the productivity of goods and services production by making already-existing processes faster and cheaper. But AI has the potential to also raise the productivity of the innovation process itself. AI systems can meaningfully accelerate scientific discovery, shorten research and development cycles, and compress the time between knowledge creation and commercial application. The technology is set to not just shift the level of productive capacity but shift the rate at which productive capacity grows. This rapid evolution has spurred a fast-growing literature in economics and has also prompted extensive analytical work in the financial and consulting community. A striking feature of this literature is the extraordinary dispersion of its conclusions. In particular, estimates of the macroeconomic impact of AI range from the modest to the transformative, to the genuinely disruptive. Soon after generative AI emerged in late 2022, a March 2023 study by Goldman Sachs Research projected that widespread AI adoption could drive a 7 per cent increase in global GDP over a decade, raising annual labour productivity growth by around 1.5 percentage points. A June 2023 study by McKinsey was even bolder, suggesting that AI, when combined with broader automation of work activities, could add as much as 3.4 percentage points per year to productivity growth through 2040. More recent estimates span a wide range. At the lower end, Acemoglu (2025) concludes that aggregate total factor productivity (TFP) gains over the next ten years are unlikely to exceed 0.66 per cent in total, implying only a marginal increase in annual TFP growth. In contrast, a 2025 OECD study projects that AI could add between 0.4 and 1.3 percentage points to annual aggregate labour productivity growth over the next decade in countries with high AI exposure and widespread adoption, such as the United States and the United Kingdom. Aghion and Brunel (2024) generate a median estimate of 0.68 percentage point additional annual TFP growth. Bergaud (2024) suggests an annual productivity boost for the euro area of 0.29 per cent. Larger productivity gains are envisaged by studies that allow the innovation process to be transformed by AI, with the potential growth rate substantially boosted by computing power (“compute”) becoming a major input into the innovation process and AI also accelerating progress across a range of frontier technologies. The most optimistic scenarios foresee AI transforming cogniti