Moody’s warns that governments face a daunting policy trade-off as they prepare for the economic benefits of artificial intelligence (AI), which may not materialize for years while immediate costs mount. The firm projects that AI could boost global GDP by 1.5% annually across 106 countries, but substantial upfront investments in digital infrastructure are necessary, which could exacerbate existing budget constraints. Additionally, the transition to AI poses risks to labor tax revenues due to potential job disruptions, highlighting the urgent need for governments to invest in reskilling and social safety nets. As nations like the U.S. position themselves to lead in AI, they must balance significant spending demands against the promise of future productivity gains.
Moody’s warns of fiscal risks as AI adoption demands upfront costs
