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Doha, Qatar: QNB affirmed that the US economy is reaching an inflection point following a long period of weak productivity caused by chronic structural constraints, particularly following the rapid progress achieved in artificial intelligence applications, which have opened the way for a new growth cycle that could be more sustainable.
In its weekly report, the bank noted that the impact of this transformation will not be limited to the United States alone, as its benefits are expected to extend to other economies, particularly in Asia and the Middle East. These regions have strengthened their investments in supply chains and artificial intelligence technologies, while the declining cost of adopting such technologies is accelerating their global diffusion, thereby enhancing the prospects for a tangible boost to global economic growth over the medium term.
The report noted that productivity growth is the most important driver of long-term economic prosperity, as it determines the appropriate pace of economic growth without increasing inflation, the speed at which living standards improve, and the sustainability of wage growth.
In this context, it pointed out that productivity growth in the United States has experienced significant fluctuations throughout most of the post-World War II period, with long phases of high productivity growth followed by extended periods of decline.
The report highlighted that the average labor productivity growth reached around 3 percent annually in the decades that followed. Over time, a noticeable slowdown emerged until the wave of internet and e-commerce innovations in the mid-1990s and early 2000s. However, the global financial crisis that began in 2007 hindered that momentum, leading to a prolonged period of weak productivity up until just before the COVID-19 pandemic.
The report, however, noted that after a prolonged phase of weak productivity and the subsequent economic slowdown, signs of recovery began following the pandemic, paving the way for a new wave of innovation led by artificial intelligence technologies.
QNB said that advanced economies have faced a marked slowdown in productivity growth over decades due to accumulated structural factors, most notably the maturation of technological innovations, declining returns on research and development, and stagnation in education and human capital levels. This has constrained potential GDP growth and reinforced the perception that these economies had entered a low-growth equilibrium.
The report said that this analytical framework is now facing a fundamental challenge with the emergence of artificial intelligence as a potential technological revolution, particularly after the surge in generative AI between 2020 and 2022. A key question now arises regarding the ability of this technology to break the cycle of weak productivity.
QNB’s outlook was based on two main factors explaining the potential impact of artificial intelligence on the economy. The first lies in the unique nature of AI as a general-purpose technology that goes beyond efficiency gains to encompass the generation of knowledge, the acceleration of innovation, and the expansion of feasible economic frontiers by enhancing human cognitive capabilities. In that sense, artificial intelligence can partially ease traditional constraints related to labor and capital, supporting a more sustainable path for productivity growth.
The second factor, according to the report, is the massive wave of capital spending currently underway in the United States, led by major technology companies investing heavily in artificial intelligence infrastructure.
The bank viewed this trend as a strong signal of expectations for a long-term structural shift in production functions. These investments also enhance labor productivity and create network effects that accelerate the diffusion of technology across sectors, thereby preparing the US economy for a new growth cycle in the coming years.
