The emerging dominance of generative AI applications like ChatGPT and Stable Diffusion has set the stage for an economic revolution, according to a report by the global management consulting firm McKinsey.
This transformative technology has the potential to add up to $4.4 trillion to the global economy each year, McKinsey claims—equivalent of 15 to 40 percent of the entire economic impact of artificial intelligence as a whole.
"Generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually across the 63 use cases we analyzed," the report states, highlighting the economic potential of the emergent technology.
Generative AI—a branch of the AI field that focuses on creating new content based on pre-trained data— applications like ChatGPT, Microsoft’s Copilot and Stable Diffusion have become extremely popular due to their ever-growing number of use cases that range from complex medical diagnosis to pure artistic creations.
The McKinsey report accentuates AI’s potential to impact specific industries, stating, "Banking, high tech, and life sciences are among the industries that could see the biggest impact as a percentage of their revenues from generative AI."
Generative AI has already revolutionized how some work is performed, automating activities and enhancing individual productivity. And the report says it’s still early days.
"Current generative AI and other technologies have the potential to automate work activities that absorb 60 to 70 percent of employees’ time today," McKinsey explains.
Different Industries Will See Different Impacts
According to McKinsey, customer operations, marketing and sales, software development, and R&D are some of the areas more prone to be impacted by generative AI.
“Its potential is such that it could increase the overall impact of AI by 15 to 40 percent," the report says.
In terms of industries, banking, high-tech, and life sciences stand to reap the greatest benefits.
"Across the banking industry, for example, the technology could deliver value equal to an additional $200 billion to $340 billion annually if the use cases were fully implemented,” the report reads, noting that generative AI could bring between $400 and $660 billion a year to retailers.
Notably, this transformation in the workforce is expected to accelerate with technology advancements. McKinsey estimates that half of today’s work activities could be automated between 2030 and 2060, a prediction that has been worrying Americans more and more as AI tools grow in popularity.
Meanwhile, global services firm PricewaterhouseCoopers published a report estimating that AI's contribution to the global economy could reach a staggering $15.7 trillion by 2030. Such optimistic forecasts have sparked a significant shift in investor interest, which is now migrating from cryptocurrency to artificial intelligence technologies.
This increased fascination for anything related to AI has led a wider group of investors and hedge funds to examine generative AI’s potential implications for business and society, with many shifting their focus from crypto to AI startups.
The fusion of generative AI with other technologies could add 0.2 to 3.3 percentage points annually to productivity growth, PWC notes, arguing that businesses could see an acceleration toward a more sustainable and inclusive world—provided we effectively manage worker transitions and potential risks.