SYDNEY: Australia has become the world’s third-largest artificial intelligence (AI) investment destination behind the United States 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 (CBA) says.
CBA’s updated estimates suggest that Australia’s data centre pipeline is closer to six GW or A$150bil (US$105bil), 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 centres 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$7bil 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 of Australia (RBA) 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 and one percentage point (ppt) 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 gross domestic product growth, of up to one-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. — Bloomberg
