The global economy may be heading toward fragmentation! Australia is betting on AI to become a new growth engine.

Title context: The global economy may be heading toward fragmentation! Australia is betting on AI to become a new growth engine. Text: In the next 40 years, as the global economy may become more fragmented and harder to predict, Australia will rely on the deployment and development of artificial intelligence (AI) to drive economic growth. Australia's Treasury Department said in the "2026 Intergenerational Report" released on Monday that "the rise and application of AI may help achieve" the long-term labor productivity growth assumption of 1.2%, a level similar to the forecast in the 2023 report. Australian Treasurer Jim Chalmers said while delivering a speech at the Australian National University and unveiling the report: "Our strengths in the 2010s will shift to new strengths such as renewable energy and critical minerals, strong institutions and strategic partnerships, and AI-enabled services." The data center boom has become a rare bright spot in the Australian economy. Westpac estimates that its scale will be comparable to the expansion of the liquefied natural gas (LNG) industry in the early 2010s. However, in the short term, this trend may exacerbate supply constraints in the Australian economy, which have already pushed up inflation and forced the Reserve Bank of Australia to raise interest rates. Australia's data center investment has surged over the past two years The report predicts that by the mid-2060s, Australia's average annual economic growth rate will slow from 3% over the past 40 years to 2%. The report points out that conflict and competition are intensifying. Although economic openness will continue to bring growth, reduce inflationary pressure, and boost Australia's productivity, countries and businesses will need to seek a balance between supply chain efficiency and national security. The report says: "Future economic performance will depend on continuing to remain open in order to obtain the benefits brought by well-functioning markets, while guarding against severe shocks caused by geopolitical instability." Chalmers said Australia's fertility rate will decline "further and faster" than expected just three years ago. He said Australia, currently estimated to have a population of 28.1 million, is expected to grow to about 39 million by the mid-2060s, lower than the previous forecast of more than 40 million. The report also emphasizes that due to long-term challenges brought by housing, demographic changes, and other structural economic trends, "pressure on intergenerational equity is intensifying." The report estimates that "if the homeownership rate had remained at the 1981 level, based on the latest currently available data, about 250,000 households in the 25 to 34 age group would own their own homes."