Dual PhD holder Domen Zavrl has significant experience of structured financing and commodities trading. This article will look at the double-edged sword of AI macroeconomics.
With the world on the verge of an AI-driven technological revolution, the stakes are high. Although artificial intelligence may not provide an immediate solution to pressing global issues like climate change or cancer, its potential is vast. The investment landscape reflects this optimism, with more than $110 billion invested in AI in 2024 alone and still more anticipated in coming years.
Rapid adoption of digital technologies over several decades is transforming workplaces all over the world, this shift having been accelerated by the COVID-19 pandemic, when remote work and collaborative tools came to the fore. The rise of generative AI marks a new chapter in the advance of AI, delivering user-friendly tools that do not require specialist skills such as coding, making them accessible to a broader audience.
In terms of AI’s impact on jobs and the economy, opinions vary widely. While some experts warn of a significant decrease in human labour forces, others take a more measured view. Various industry surveys suggest that many workers are already using AI in some form, with businesses all over the world leveraging its ability to save time, reduce errors and enhance creativity.
Throughout history, technological advancements have impacted macroeconomics profoundly. Nevertheless, the current AI revolution is predicted to unfold at a pace never seen before. While the integration of electricity into society took circa 70 years to fully materialise, AI is being embraced and deployed at a dizzying rate, with investment in AI surging and its impact on economic growth yet to be fully realised.
The development of AI tools capable of reasoning and executing autonomous tasks poses unique challenges for the labour market. While AI has largely been used to automate repetitive tasks to date, its potential to adapt and execute complex tasks could disrupt skilled jobs. Some analysts argue that many skilled roles could become obsolete, and sooner than we think. Others contend that AI will enhance positions rather than threaten their existence by lifting the burden of mundane responsibilities, in doing so enabling workers to focus on more engaging and meaningful work.
Recent shifts in the AI landscape are challenging the notion that only technology giants like Google, Amazon and Facebook can dominate AI innovation. Take for example Deep Seek, a pioneering AI start-up that has effectively demonstrated that smaller, highly specialised organisations pose potential to disrupt their respective industries through groundbreaking innovations. Deep Seek’s work in AI-driven knowledge discovery has inspired a new wave of investment in non-traditional, agile start-ups.
With geopolitical shifts continuing to disrupt global supply chains in 2025, particularly EU regulatory interventions and US–China rivalry, the World Trade Organization estimates that global trade growth will slow to 1.5%, down from 3.2% in 2022. They attribute this to shifts in supply chains and protectionist policies. Countries are prioritising domestic production of strategic resources like AI chips, semiconductors and rare earth minerals.
Meanwhile, regional trade alliances such as ASEAN and the EU are predicted to expand economic partnerships. Governments are also increasing investments in sustainable energy sources, reducing reliance on supply chains that are fossil fuel heavy. The semiconductor sector is a prime example, with the US CHIPS Act having incentivised domestic chip production, with similar efforts currently underway in the EU and China as part of wider efforts to secure critical technologies.
The macroeconomic landscape of 2025 is being defined by central bank policies, global trade realignments, financial innovation and AI-driven productivity shifts. For policymakers, businesses and investors, understanding these trends is essential, enabling them to navigate both opportunities and risks.
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