Australia has become the world’s third-largest AI investment destination behind the US and China, a result that’s set to spur productivity in an economy currently struggling with a low potential growth rate and high inflation, Commonwealth Bank of Australia says.
CBA’s updated estimates suggest that Australia’s data center pipeline is closer to 6 gigawatt or A$150 billion , implying installed capacity could more than triple over the period to 2030, according to a research note released Monday by economists led by Luke Yeaman.
Shares in Australian data centers jumped following the report, with Goodman Group rising as much as 6.9%, the most since Dec. 23. NEXTDC Ltd., which partnered with OpenAI last December to build a A$7 billion large-scale computing cluster in Sydney, climbed 7.2% as did Megaport Ltd. Macquarie Technology Group Ltd. advanced 7.1% while DigiCo Infrastructure was up 3.1%. The 200-share benchmark ASX index is up 1.8%.
Australia’s productivity performance ranks among the weakest in the developed world, leaving the economy prone to inflation once growth pushes beyond 2%. That fragility helps explain why the Reserve Bank became the first major monetary authority globally to raise interest rates this year.
Yet Australia is drawing AI investment away from other global contenders:
CBA reckons a productivity uplift of between 0.8-1.0 percentage point per year as a result of the AI boom is a “credible estimate.” The bank recently upgraded Australia’s potential growth rate to 2.1%.
“If AI can deliver a sustained increase in productivity, and trend GDP growth, of up to 1-ppt a year that would materially improve economic and market outcomes,” Yeaman said. If realised, he said, AI could see Australia’s potential growth rate “lift to around 3% over coming years.”
RBA Governor Michele Bullock said last week that improving productivity growth is key to ensuring low and stable inflation. The government is due to release a budget in May, and pressure is mounting on it to rein in spending and tackle productivity-enhancing measures.
The country’s Productivity Commission estimates AI-related labor productivity growth of roughly 0.4 percentage point per year, placing Australia in the lower range of estimates.
“We think this figure is a little pessimistic but agree that Australia will struggle to capture the full benefits of AI on offer,” Yeaman said. “Australia is not the US. There are long-standing structural features of our economy that typically hold us back from being at the cutting edge of adoption of new technology and business practices.”
With assistance from Carmeli Argana.
This article was generated from an automated news agency feed without modifications to text.
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