External Deputy Governor Michelle Alexopoulos discusses the evolution of artificial intelligence and its potential effects on jobs, productivity and economic growth—now, and in the future.
Watch External Deputy Governor Alexopoulos speak at the 2026 Spring Policy Conference hosted by the Ottawa Economics Association and the Canadian Association for Business Economics. Read the full speech.
New technologies rarely change the economy overnight. They take decades to evolve, gradually shifting how a specific industry or segment of the economy works, enabling new products and services to emerge.
But sometimes the changes are supercharged, spreading across industries and broadly transforming the whole economy. Take electricity, computers and the internet, for example. These revolutionary innovations are referred to as general-purpose technologies, or GPTs.
Artificial intelligence (AI) has been simmering in the background for about 75 years. But with recent advances, more people and businesses are starting to use it. And some experts think it might become a GPT. If it does, it will eventually fundamentally reshape jobs, improve productivity and make businesses more competitive. That could lead to higher wages, cost savings for consumers and less pressure on inflation.
While we can build forecasts based on what we think will happen, we know those forecasts will likely change as new information becomes available. But given AI’s potential effects on productivity, inflation and the job market, it is not something we can ignore.”
AI is expanding rapidly around the world. Investment in AI data centres has risen sharply, particularly in the United States. But this pace of expansion doesn’t come without challenges—for example, power generation capacity has struggled to keep up.
In Canada, data show that the adoption of AI is gaining steam but is uneven across sectors. Many businesses that have not yet started using AI say it’s because AI doesn’t meet their needs or their workers don’t have the right skills.
Still, signs of small productivity gains are emerging. And as AI continues to boost productivity, the economy can produce more goods and services without people having to work harder. Because productivity shapes the Bank’s estimates of future economic growth, the potential for AI to improve productivity is important for monetary policy decisions.
The Bank cannot control the scale or speed of AI adoption. However, if necessary, we can and will support the economy as it restructures.”
Many Canadians are concerned about what AI will mean for their jobs—and job security.
Some workers are already feeling the effects of AI. Several large technology firms have attributed recent job cuts to AI, and studies have shown weaker hiring in roles that are highly exposed to AI, like entry-level coding and customer service. This could disproportionately affect younger workers and people in AI-exposed sectors.
But based on the evidence so far, AI has not led to large-scale job losses. It is transforming work tasks, not replacing people.
Looking ahead, AI has the potential to transform the economy in ways similar to the introduction of the computer. Workplaces were restructured over many decades, and the way people worked changed significantly. Computerization affected workers and businesses in different ways—but, ultimately, it did not lead to fewer jobs.
The speed and scope of AI adoption will dictate how big and how disruptive the transformation will be.
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