BIS research suggests demand bottlenecks may limit transformative AI-driven economic growth

While transformative AI has the potential to boost economic growth by automating tasks and improving machine capabilities, large-scale automation could shift output towards investment at the expense of consumption. Using a task-based endogenous growth model, the BIS research identifies several scenarios, including 'transformative AI' (reaching 5.5% growth after two decades) and a 'demand bottleneck' scenario where innovation permanently slows, causing growth to fall below the pre-AI rate of 2%. The calibrated model suggests the demand bottleneck scenario is empirically highly plausible, projecting more moderate growth than recent studies like Korinek et al. (2026).