Forecasting really is a waste of time. Fears of a big hit to confidence and the economy after Donald Trump unveiled his tariff plan in April proved misplaced, even if the longer-term impact of what happens in Washington is going to be vital.<\/p>\n
So what fundamentals did change this year? The most obvious has been the gradual but steady invasion of artificial intelligence<\/a> (AI) into all our lives. I remember early this year being struck by someone who organised an international conference telling me how hours of work that would normally have gone into providing an information pack on the sector were slashed by the use of AI \u2013 and a bit of tidying-up.<\/p>\n This was the year AI moved from something \u201cout there\u201d to an urgent business consideration across many sectors. It was also the key factor inflating a stock-market bubble that just seems to keep going. But everyone is still trying to work their way through what it will all mean.<\/p>\n As scientist Dr Ciar\u00e1n Seoighe \u2013 a former senior executive at Research Ireland and now head of Forensics Ireland \u2013 said<\/a> when he appeared before the Joint Oireachtas Committee on AI: \u201cThere is no scientific consensus in the community on what exactly AI is: there are those who believe AI is the best thing ever, and there are those who believe it is the end of mankind.\u201d <\/p>\n [\u00a0Could we be on the verge of a techlash?Opens in new window<\/a>\u00a0]<\/p>\n Against this backdrop, both policymakers and businesses fall over themselves referencing AI, but inevitably their answer about what to actually do often falls into the Father Ted category of responding to a crisis: \u201cIs there anything to be said for saying another Mass?\u201d <\/p>\n Many potential business users, while starting to invest significantly, have still to see a return through higher profits.<\/p>\n A survey<\/a> by Forrester Research in the US around the middle of this year showed just 15 per cent of companies felt it had boosted their profit margins. It is early days, of course \u2013 but still. AI\u2019s power to summarise large documents in the way companies need is still far from perfect, and deploying chatbots to provide services to customers is having mixed results, too. The technology is there, but its profitable deployment can still be a stumbling block.<\/p>\n The recent economic outlook<\/a> published by Ibec points to a study by the UK\u2019s Office for Budget Responsibility that showed a potential impact of AI of anywhere between zero and 6.8 per cent on productivity across developed economies over the coming decade. The organisation\u2019s chief economist, Gerard Brady, concludes that \u201cwe are so early in the development and deployment of the technology that nearly all economic analysis of the long-term impacts is still speculative scenario planning rather than predictive.\u201d<\/p>\n Despite this uncertainty, massive investment in AI is driving the US economy and the shares of a small number of companies key to the sector are driving the US stock market ever upwards. Brady refers to the work of economist Carlota Perez, who has examined bubbles through history and pointed to a cycle where initial enthusiasm encourages investors, helping to fund speculative development. When the bubble bursts, some of the initial investors and companies lose out, but the new technology and the basis for development is there \u2013 and entry for new players and investors is cheaper.<\/p>\n For now, investors continue to place positive bets. But there is certainly a risk of market upheaval here, with forecasts that some firms will cut AI investment next year. And as the Economic and Social Research Institute (ESRI) pointed out<\/a> this week, many of the big US companies leading the charge are big investors, employers and taxpayers here. If they hit trouble, there will be some cost for the Irish economy. <\/p>\n We are already seeing some impact on the jobs market, though how much of the rise in youth unemployment \u2013 and the small rise in the number of 2024 graduates still looking for work \u2013 is directly due to AI is debatable.<\/p>\n It does seem a factor in a reduction by professional service firms in their graduate hiring this year. AI can perform some of the more menial tasks that new entrants would typically be charged with, though whether this is a \u201cwait-and-see\u201d decision for one year as firms try to work out what to do, or something more fundamental, is unclear. <\/p>\n All businesses still need new blood. But, like the advent of the internet, a big impact from AI in the years ahead is guaranteed. Alan Smeaton, emeritus professor at DCU and a member of the Government\u2019s AI Advisory Council, refers to Amara\u2019s Law \u2013 from futurologist Roy Amara \u2013 which says that we tend to overestimate technology\u2019s impact in the short term and underestimate it in the long term. <\/p>\n