AI Threatens Economic Balance

Key Summary

Bank of Japan Deputy Governor Shinichi Uchida warned that artificial intelligence's economic boost comes with risks, as it has delivered substantial productivity gains and triggered structural changes across labor markets. Uchida stated that AI's impact is a positive demand shock that has supported economic activity, but he also highlighted a rise in AI-related corporate bond issuance, which has put upward pressure on long-term interest rates. He emphasized the need for balanced approaches to gauge the effects of AI on the economy, alongside other sources of uncertainty such as geopolitical developments and climate change. Uchida's comments build on earlier signals from the central bank, which has been working on addressing risks linked to generative AI.