Navigating AI, demographics and geopolitics in 2026

What’s next for the global economy? In this article, our Chief Economist Anders Magnusson outlines three forces shaping the outlook: artificial intelligence, demographics and geopolitics – and what they mean for businesses.  

Artificial intelligence: Productivity promise, uneven diffusion, and new constraints 

Artificial Intelligence (AI) is emerging as a contributor to productivity growth, though the timing and distribution of gains remain uncertain.  

Organisation for Economic Co-operation and Development (OECD) modelling suggests AI could add around 0.4 to 1.3 percentage points to annual labour productivity growth over the next decade in high-exposure economies. Early signals in the United States are consistent with that upside, where AI adopting sectors such as finance and professional services have been showing stronger productivity growth.

Diffusion is uneven across countries. Anthropic’s analysis of Claude usage finds high income economies are overrepresented relative to their working age population, implying a risk that AI reinforces global income gaps if the benefits concentrate where skills, capital, data and compute already sit. 

A constraint that is moving quickly from technical to macro-relevant is energy. The International Energy Agency expects global electricity demand from data centres to more than double by 2030. Power prices, grid capacity and approvals are therefore becoming part of the AI adoption function, shaping where activity clusters and how fast it scales. 

This matters for markets as well as growth. Public sentiment remains cautious across many countries, and the OECD has warned that lower than expected returns on AI investment could trigger broader repricing, tightening financial conditions, weakening private demand, and raising financial stability risks.  

The practical implication is that strategic decisions need to be adaptable – including the ability to adjust to different outcomes, from rapid productivity acceleration to slower adoption, or a period of market adjustment if expectations run ahead of realised gains. 

Demographics: Diverging labour markets 

In developing economies, the World Bank estimates about 1.2 billion young people will reach working age between 2025 and 2035. Whether this becomes a dividend or persistent underemployment, will depend on job creation capacity and the ability to connect to global supply chains. 

In OECD countries, demographic ageing is tightening labour supply and raising the urgency for productivity gains. The OECD reports the old age dependency ratio has risen from 19 per cent in 1980 to 31 per cent in 2023 and is projected to reach 52 per cent by 2060, implying a rising fiscal burden and structurally tighter labour markets unless productivity growth compensates. 

The consequences are become clear: 

• Greater competition for skilled workers 
• More reliance on migration to fill gaps 
• Risk of ‘brain drain’ or lack of skilled workers in developing countries. 

A better outcome is deeper supply chain integration – creating jobs locally in developing economies while connecting them to global demand. This becomes more important as AI potentially limits entry-level roles in some sectors, making workforce transitions more difficult.  

Geopolitics: Decision making under uncertainty 

We continue to experience global economic uncertainty driven by geopolitical challenges. In this environment, scenario planning is critical for decision making.  

The value of scenarios is that they force business to focus on risk and potential exposure.  

Scenario planning also helps prevent ‘headline capture’. Even when geopolitics dominates attention, other risks can still break either way. A clear example is AI. If expected returns disappoint and markets reprice, investment conditions could tighten at the same time as energy costs rise, compounding downside risk.  

The aim is to keep decisions anchored to the structural forces (AI diffusion, demographics, supply-chain realignment) while stress testing for shocks that can change the near-term path. 

What this means for Australia

These trends create both opportunity and pressure: 

• Productivity becomes critical as an ageing population tightens the labour market 
• Global exposure remains high, given Australia’s trade‑linked economy 
• Scenario planning will be essential as multiple risks interact. 

How BDO can help  

Our economic advisory team can help you translate global volatility, AI-driven change, and geopolitical risks into informed decisions. If you’d like to explore how these trends could impact your organisation, our team can help.