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Or sign-in if you have an account.AI adoption rates in Canada trail behind the U.S. Photo by Getty ImagesThe benefits of artificial intelligence are starting to show up in Canada’s economic and productivity data, but the technology brings with it risks and challenges, too, one of the Bank of Canada‘s external deputy governors told a conference in Ottawa this week.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorIn a speech to the Canadian Association of Business Economics’ 2026 Spring Policy Conference on Wednesday, Michelle Alexopoulos said that while the use of AI is currently concentrated to a few sectors such as finance and insurance, the central bank is starting to see evidence of small productivity gains from the technology.The central bank’s first-quarter Canadian Survey on Consumer Expectations, for example, found more than 30 per cent of respondents said they use AI to generate and edit content at work, while almost 25 per cent said they use the technology to analyze data, code or conduct research. A little more than 20 per cent of respondents said they use AI to automate work.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe central bank’s most recent Financial Systems Survey, which gauged experts in risk management in the financial sector, also found AI was being used to automate routine tasks which freed time for workers to focus on “higher-value” ones.“To put it simply, the Bank of Canada cares about AI because of its potential to significantly affect productivity, economic growth, employment and inflation,” Alexopoulos said. “When productivity improves, living standards rise.”Any improvement in Canada’s economic productivity would be welcome by economists. Productivity has been lagging for the past 25 years, with annual growth reaching three per cent in the 1960s and 1970s before falling to about one per cent between 2000 and 2019.The declines still persist today. Business labour productivity — a measure of the volume of goods and services produced per hour worked — was up 1.1 per cent year-over-year in 2025, according to data from Statistics Canada.By comparison, U.S. productivity increased by 2.9 per cent year-over-year in the first quarter of 2026, according to data from the U.S. Bureau of Labour Statistics.The Bank of Canada has been contemplating the arrival of AI and its economic effects for some time.In a speech in September 2024, Governor Tiff Macklem first noted the broad enthusiasm for AI and the uncertainty around how the technology would develop.Since then, AI adoption has been gaining steam. Statistics Canada data from 2025 suggest that 12 per cent of Canadian businesses were using AI, quadrupling from the three per cent in 2022.Macklem told a House of Commons finance committee meeting on May 4 that the central bank believed AI adoption would be a tailwind for productivity.“We have revised up our outlook for productivity growth a bit going forward relative to what we had (in January)…. One, the economy is working through an adjustment to higher U.S. tariffs that will temporarily depress productivity growth, and then it comes back,” he said.“AI is increasingly being deployed by Canadian companies, and our assessment is that it will boost productivity growth going forward.”Economists, however, say the technology is still so new that it may take a while to see a significant impact on productivity.Nathan Janzen, an assistant chief economist at the Royal Bank of Canada, said in an interview that AI could help mitigate persistent labour shortages that are driven by an aging population and a low unemployment-to-job-vacancy ratio.“In that kind of a back drop, you do look for ways to increase production other than adding workers,” he said. “AI investments and productivity growth is the best way that you can do that over time.”However, he noted Canada’s lagging productivity is also likely tied to weak business investment and a lack of competition, which have been problems for decades.“Our tax structure, the governance structure of the Canadian economy itself, the regulatory backdrop across different provinces and territories … these are all kinds of structural factors that have been a negative for Canadian productivity growth versus what we’ve seen in the United States,” he noted.“Those don’t get fixed by just adopting AI.”Janzen said measures such as cutting red tape, better utilizing immigrant skills, improving tax competitiveness, adopting new technologies and capitalizing on a highly-educated workforce could better improve productivity.He also noted that AI adoption rates have been “relatively low” in Canada. AI adoption rates in Canada trail behind the U.S., with data from the Census Bureau suggest roughly 18 per cent of businesses reported actively using AI as of year-end 2025.“It will take time for those investments to pay off in terms of actual productivity growth, but in the longer run, productivity gains come from businesses actually adopting that technology,” Janzen said.The labour market will also experience restructuring as companies and workers adapt to new technologies.In her speech, Alexopoulos said there is evidence that demand is already rising for workers with AI skills, but she also acknowledged fears that some jobs will be made redundant by the technology.“To be sure, some workers are already feeling the effects of AI…. This is a real concern,” Alexopoulos said.“But, broadly speaking, the evidence does not yet point to widespread worker displacement because of AI.”Christopher Worswick, a labour economics professor at Carleton University, said in an interview that there may be short-term disruptions to Canada’s labour market. For example, new graduates and students may have problems landing jobs.“In the medium term, I suspect firms will probably pay higher wages for workers who can work with AI effectively. People who can identify mistakes and inconsistencies and work interactively with multiple AI programs are, realistically, going to be super productive,” the professor said.Worswick added that, much like the rise of the internet and technological advances in the agricultural sector, adaptation to AI will lead to job creation in the long term.Closing the productivity gap with the U.S. may not be easy.A report by the Federal Reserve Bank of Dallas suggested that the adoption of AI could boost productivity growth by between 0.3 and 3.0 percentage points a year over the next decade. Canada’s projected growth is slow in comparison — a recent Bank of Canada analytical paper said that, if Canadian businesses continue to adopt AI, the country’s economy could see annual productivity gains ranging from 0.35 percentage points to 1.13 percentage points over the same window. 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