Hunter sees AI lifting demand before productivity gains emerge
Artificial intelligence is adding to demand before broad productivity gains emerge, Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter said. At the UBS Australasia Conference in Sydney, she linked the investment boom to near-term inflation pressure.
Investment runs ahead of productivity
Australian data centre investment has increased tenfold over the past three years, albeit from a low base.
Imported equipment limits its net GDP contribution, while construction, engineering and energy infrastructure receive spillovers.
AI investment supports US growth and technology exports from Taiwan and South Korea.
Hunter noted limited evidence of aggregate productivity gains as firms reorganise.
Estimates of AI's annual productivity growth impact over the next decade range from 0.1 percent to over 2 percent; one study puts permanent software engineering productivity gains at around 30 percent.
Investment bottlenecks are raising some electronics prices, but Hunter sees AI's long-run inflation effect as broadly neutral as supply and demand expand.
Exposure does not equal displacement
Jobs and Skills Australia estimates that 4 percent of Australian workers are highly exposed to AI automation, against 31 percent exposed to augmentation.
These measure task potential, not actual adoption or job losses.
Most RBA business contacts report no headcount impact and anticipate none over the next year.
Weaker hiring among younger, AI-exposed workers remains tentative.
AI-related shares have roughly quadrupled since end-2022; about 5 percent of Australian household financial wealth is exposed, directly and through superannuation.
Gains carry financing risks
Hunter said stronger investment and lower saving could raise the neutral interest rate.
She also warned that disappointing AI returns expose equities and corporate debt to repricing.
Faster AI advances may worsen cyber risks before defenses develop, adding operational vulnerabilities to financial exposures.