Australian manufacturers could face both productivity opportunities and workforce challenges as artificial intelligence continues to advance, according to the World Bank Group’s World Development Report 2026: The Promise of Artificial Intelligence.
The report identifies AI as a general-purpose technology with the potential to reshape economies, while warning that the benefits and disruptions will be uneven across countries, industries and firms.
Although the report does not provide Australia-specific findings, its analysis of high-income economies is relevant to Australian manufacturing, particularly as AI capabilities increasingly extend beyond knowledge-based tasks and into more routine and manual work.
The World Bank Group said the AI value chain spans commodities, manufacturing and services, creating opportunities across sectors including electronics and semiconductor production, data centres and AI applications.
“Participation in the AI value chain is becoming a major source of investment and job creation,” the report said, while noting that value capture remains concentrated among a relatively small number of firms.
The report also found that advanced economies are expected to see larger productivity gains from AI than developing economies under current adoption trends. In its analysis, productivity benefits are expected to be more than twice as large in advanced economies, partly because of wider AI adoption.
However, the World Bank Group said the future impact of AI remains uncertain and will depend heavily on how quickly businesses adopt the technology and how its capabilities develop.
For manufacturing, the report noted that a significant expansion of AI into manual tasks could increase exposure among medium-skill occupations. Under an advanced AI progress scenario, capabilities could spread to routine manual and non-manual activities, including work in manufacturing and agriculture.
The report said firms with stronger management practices, higher productivity, greater innovation activity and better market access were more likely to adopt AI and use it more extensively.
“Uneven AI adoption could widen productivity gaps between and within countries,” the World Bank Group said.
The findings suggest that for Australian manufacturing, the potential gains from AI adoption will depend not only on access to the technology but also on workforce skills, business capabilities and the ability of firms to integrate AI into their operations.
The World Development Report 2026 cautioned that the eventual economic and employment effects of AI cannot be predicted with certainty, particularly as the technology continues to develop and spread across new types of work.
This article contains information provided by World Bank Group and is intended for general use only. It does not take into account your personal, professional, or business circumstances.
