Unlocking Potential: AI Could Transform Canada's Economy

New research from PwC Canada suggests that an aggressive push towards artificial intelligence (AI) adoption could propel Canada's GDP to an astonishing $3.65 trillion by 2035. Currently, Canada’s GDP stands at $2.89 trillion.

The report highlights that Canada’s economic landscape could see exponential growth if businesses act quickly to embrace AI, while simultaneously addressing the challenges posed by climate change.

Three Scenarios for Growth: How Fast Can Industries Adapt?

PwC outlines three potential scenarios for economic growth, influenced by how rapidly industries adapt to technological advancements and respond to global issues. The outlook includes factors such as geopolitical tensions and evolving demographics that are reshaping traditional industry boundaries.

The most optimistic scenario predicts a breathtaking 9.3% growth by 2035, contingent on global cooperation in AI adoption and robust cybersecurity trust.

The Current Landscape: Are We Falling Behind?

Yet, Nochane Rousseau, PwC Canada's national managing partner, notes a worrying trend: Canada’s AI adoption is currently running at about 75% of U.S. levels. This gap is a significant concern, especially given that some Canadian companies are holding back on essential investments due to economic uncertainties.

Strategic Investments Needed for AI Advancement

To close this gap, substantial investments in research and development are crucial. Companies must explore new avenues for scaling innovation. Canada was once a frontrunner in AI development; the challenge now lies in effectively commercializing these technologies.

Defence and Sustainability: New Growth Opportunities

Even with the most optimistic growth forecasts, Canada still lags behind the U.S., which may see a 14% increase in GDP over the same period. Rousseau emphasizes that interdisciplinary collaboration and government support are vital.

Additionally, the report spotlights key sectors—mining, technology, and defense—as ripe for AI-driven growth, especially as the nation grapples with new trade realities and climate demands.

A Call to Action: Bridging the AI Gap

The report suggests that corporations need to adapt to serve adjacent markets and innovate, akin to how large companies are venturing into clean energy solutions. For instance, the food industry faces pressures from climate change and evolving consumer preferences. The mining sector could play a crucial role in sustainably increasing food production.

A Boost for Defence: Economic and National Security Implications

With Prime Minister Mark Carney’s announcement of increased defense spending to meet NATO benchmarks, the defense industry could become a significant source of economic growth. Companies like Bombardier are already pivoting towards defense, hinting at vast opportunities ahead.

Critical Minerals and the Future of Mining

Moreover, Canada's rich repository of critical minerals stands to benefit the electric vehicle and defense sectors. However, AI and quantum computing will be essential for these industries to thrive.

The Role of Government: Fueling Innovation

For these ambitions to materialize, government policies will need to foster innovation, attract skilled labor, and build public trust in AI technologies. The government should consider prioritizing procurement from Canadian AI companies to stimulate growth.

As AI continues to evolve, the collaboration between government and businesses will be crucial to unlock its full potential, making adoption inextricably linked to building confidence and security.