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Economists are cautiously optimistic that advances in artificial intelligence could boost productivity across major economies, potentially helping governments manage soaring debt. Debt levels in most rich nations already exceed 100% of GDP and are projected to rise further due to ageing populations, higher defence spending, climate commitments, and rising interest payments.

U.S. policymakers, in particular, see AI as a potential driver to lift post-2008 productivity and free workers for higher-value tasks. Yet experts warn that even a strong AI-driven growth surge would not fully offset the structural pressures on public finances.

AI’s Potential Impact on Public Debt

The OECD and economists working with Reuters estimate that a productivity boost from AI could lower projected debt in OECD countries by up to 10 percentage points by 2036. That would reduce the expected rise from roughly 150% of GDP to around 140%, still sharply higher than current levels of approximately 110%.

In the U.S., best-case scenarios suggest debt could rise to 120% of GDP over the next decade instead of 100%, with one economist projecting little change. The key variables include whether AI creates more jobs than it displaces, whether firms pass productivity gains to workers via wages, and how governments manage spending.

Demographics and Limits

Demographics remain a central constraint. Ageing populations and entitlements tied to them are the root causes of long-term debt growth. Economists note that even with a productivity surge, labour shortages and slower immigration could offset AI gains. Countries like Italy and Japan may see smaller benefits from AI due to lower adoption rates and smaller sectors that can leverage the technology.

Fiscal Uncertainty

AI could raise government revenues through higher productivity and wages, but the effect is uncertain. If automation primarily benefits profits and capital rather than labour, fiscal gains could be limited. Additionally, public spending may rise alongside growth, dampening potential debt relief. Social security and other entitlement programs, indexed to wages, will continue to pressure budgets regardless of AI-driven efficiency.

Interest rates and debt servicing costs add another layer of uncertainty. Economists warn that recessions or financial shocks could prevent AI-driven productivity gains from providing timely relief.

Analysis

AI offers a potential “breathing room” for overstretched economies, buying time for governments to tackle structural deficits. Even if growth rises to 3% in the U.S. through 2040 above Federal Reserve expectations it will not solve fundamental fiscal challenges.

Economists stress that AI is a supplement, not a replacement, for fiscal reform. Rising productivity may help governments manage debt growth more sustainably, but without structural policy adjustments addressing demographics, entitlement programs, and spending priorities, the debt trajectory remains precarious.

Ultimately, while AI could improve efficiency and output, it is unlikely to carry the heavy lifting required to stabilize public finances on its own.

With information from Reuters.

On Sunday, Mexican security forces killed 59-year-old Nemesio Ruben Oseguera Cervantes, alias “El Mencho”, the leader of the notorious Jalisco New Generation Cartel (CJNG), based in western Mexico’s Jalisco state.

The Mexican defence ministry acknowledged that the lethal operation had been conducted with “complementary information” from the United States, whose “peacemaker” president, Donald Trump, has repeatedly threatened to attack Mexico to combat the drug cartels.

Mind you, these are organisations that owe their very existence to US policy and drug consumption in the first place.

US Deputy Secretary of State Christopher Landau greeted the news of El Mencho’s death with glee, taking to X to proclaim: “This is a great development for Mexico, the US, Latin America, and the world.”

And yet things aren’t looking quite so “great” thus far.

As anyone who has ever paid remote attention to global affairs might have predicted, violence has broken out across several Mexican states in the aftermath of the killing – which is generally what happens when you take out a cartel kingpin.

Gunmen have torched vehicles and blocked highways in various locales while various US media have reported sensationally on the plight of American tourists “stranded” in Mexican resort cities on account of the upheaval.

Shortly after his initial enthusiastic post, Landau returned to X with a “PS, I’m watching the scenes of violence from Mexico with great sadness and concern.” But no matter: “We must never lose our nerve.”

The deputy secretary of state ended his “PS” with some words of encouragement in Spanish for the Mexican nation: “¡Animo Mexico!” (Cheer up, Mexico!)

But again, there is hardly room for cheer given that there is not a single example in pretty much the entire history of the world in which the killing of one cartel boss has resolved the narcotrafficking problem – or anything else, for that matter.

Recall the case of Pablo Escobar of the Medellin Cartel, killed in 1993 by Colombian police with a whole lot of help from the US Drug Enforcement Agency (DEA).

Despite Escobar’s absence, the international drug trade proceeded apace, and ensuing decades played host to spectacular levels of violence in Colombia – much of it coincidentally perpetrated by heavily US-backed state security forces.

In one particularly memorable episode, members of the Colombian army slaughtered an estimated 10,000 civilians and passed the cadavers off as left-wing “terrorists”.

To this day, Colombia remains the world’s top producer of cocaine.

In other words, to hail El Mencho’s demise as a “great development” for Mexico or anyone else is at best preposterously delusional.

On Sunday I phoned a Mexican friend in the southern state of Oaxaca, a supporter of Mexican President Claudia Sheinbaum, for our requisite argument over the day’s events. In his view, Mexico’s government had simply been “doing its job” in the “war on drugs” by eliminating El Mencho, and the US had nothing substantial to do with it.

Indeed, much like her predecessor and mentor Andres Manuel Lopez Obrador, Sheinbaum has perfected the art of doing the gringos’ dirty work while purporting to act in a “sovereign” fashion – and even to defy the imperial overlords to the north.

Granted, she does not have a whole lot of room to manoeuvre given the recent kidnapping by the US of Venezuelan head of state Nicolas Maduro – and the fact that Trump has made it known that he is beholden to no law, whether domestic or international.

But while Sheinbaum may have seen no choice but to temporarily placate the Americans and satisfy Trump’s need for blood, Mexicans will pay a heavy price.

A brief review of contemporary Mexican history confirms as much. No sooner did then-Mexican President Felipe Calderon launch his “drug war” under US guidance in 2006 than homicides and enforced disappearances skyrocketed in the country.

Well over half a million people have since been killed and disappeared, many of them victims of militarised agents of the state who often operate in cahoots with organised crime.

Nary a dent has been put in the northward flow of drugs while the southward flow of US-manufactured weapons continues unabated.

The state of Jalisco itself happens to have the highest number of enforced disappearances in all of Mexico and made headlines last year with the discovery of a clandestine crematorium on a ranch outside Guadalajara, one of the host cities of the upcoming World Cup.

The ranch was reportedly used by the CJNG as a recruitment and training centre as well as an extermination site.

And the removal of El Mencho from the equation will do precisely nothing in terms of pacifying the landscape – just as the respective extraditions to the US of Sinaloa cartel leaders Joaquin “El Chapo” Guzman and Ismael “El Mayo” Zambada merely set off an ongoing violent battle for power.

Contrary to lofty soundbites from US officials, the empire is not at all interested in getting rid of either drug trafficking or violence south of the border as both phenomena provide a perennial excuse for US interference in Mexico and beyond.

Were the gringos actually serious about ridding “Mexico, the US, Latin America, and the world” of the whole cartel problem, a decriminalisation of drugs would do much to nip the business in the bud by rendering the movement of drugs far less fantastically lucrative.

A moratorium on the US’s obsessive manufacture of weapons would also help.

Obviously, nothing so much as resembling those potential solutions is even on the horizon. If it were, that would be one hell of a “great development” indeed.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.