Market outlook: AI shift could lift Canada's productivity growth

Vanguard economist Kevin Khang says investor focus is moving from AI infrastructure toward firms that implement AI, and that broader AI adoption may raise productivity in Canada’s service-heavy economy while partly offsetting demographic pressures.

Investor attention is shifting from companies that build AI infrastructure to those that apply AI inside their operations. Vanguard's Kevin Khang describes this as a new phase focused on implementation. He says AI is likely to automate routine tasks and augment human labour rather than fully replace it. The discussion is framed by Canada’s service-heavy economy and demographic pressures from an aging workforce. Key points: - The current phase of AI investing emphasises implementation over infrastructure spending. - Productivity gains are expected to come from automating routine tasks and enhancing human labour. - Canada's economy is concentrated in services, which makes it more exposed to labour-intensive work. - Demographic trends such as an aging workforce increase the importance of productivity improvements. - Khang notes risks remain and successful outcomes depend on broad adoption and effective implementation. Summary: If implemented widely, AI-driven efficiency gains may offset slower labour-force growth and support economic output in Canada. The scale and timing of those productivity improvements are uncertain and depend on successful implementation and adoption. Undetermined at this time.