The economic opportunity of generative AI in Portugal

Generative AI will boost global economic growth in the coming decade. It can increase productivity and boost Portugal’s competitiveness. To capture the next wave of AI benefits across society, Portugal needs to promote innovation, invest in skills and ensure clear rules.

An Implement Consulting Group study commissioned by Google has estimated generative AI’s GDP contribution and implications on jobs in Portugal. Capturing the full potential of generative AI, however, depends on a number of drivers of AI adoption – from a robust operating environment to the availability of skilled AI practitioners.

Key findings of the study

• Economic opportunity: Generative AI could boost Portugal’s annual GDP by EUR 18-22 billion, amounting to +8% GDP in the peak year if widespread adoption is achieved. Generative AI technology is developing faster than previously anticipated, and the peak economic contribution could come sooner than expected, already in around ten years.
  
  The gains come from three sources, including productivity increases from people working with generative AI, freed-up time from generative AI’s automation potential and the re-employment of time for other value-creating activities.
  
  
• Job implications: In Portugal, 60% of jobs are expected to work together with generative AI, 34% of jobs are likely to remain unaffected by generative AI, and only 6% of jobs are deemed highly exposed to generative AI, leading to some job closures. However, new jobs in the AI-powered economy are expected to replace those lost due to automation, resulting in unchanged employment levels.
  
  
• Key sectors benefitting: Around 85% of generative AI’s economic potential lies in service sectors, while manufacturing and other sectors can also benefit.
  
  
• AI readiness: Overall, Portugal is relatively well positioned on the early foundational drivers of AI adoption that ensure a safe and reliable AI-ready environment. Portugal performs particularly well on operating environment but could improve its government strategy and infrastructure to catch up to its European peers. Furthermore, Portugal is challenged in terms of being an innovator of more specialised AI applications and falls significantly behind peers on talent.

Harnessing the gains from generative AI in Portugal requires enhanced efforts on basic AI adoption drivers and accelerated commercial uptake.