7 July 2026
One of the key themes shaping current investor sentiment is the widening “productivity gap”; the disconnect between record investment in technologies such as generative and agentic AI and the lack of meaningful improvement in global economic productivity. According to chief economists at the World Economic Forum, the enterprise-wide benefits of AI are taking longer to emerge than many anticipated, creating a structural mismatch with significant implications for asset prices, monetary policy and credit markets.
The most immediate risk lies in equity valuations. Technology shares have rallied on expectations that AI will deliver a step change in corporate profitability. However, if businesses continue to struggle to translate heavy AI spending into measurable earnings growth, investors may begin to question those lofty valuations, increasing the risk of a broader market correction.
The delayed productivity boost is also complicating the inflation outlook. Higher productivity allows companies to raise wages and output without fuelling price pressures, but with those gains proving elusive, inflation has remained relatively sticky. As a result, central banks may keep interest rates elevated for longer than previously expected, supporting bond yields while increasing refinancing costs for businesses.
Financial institutions are responding by accelerating the adoption of agentic AI, autonomous systems capable of completing complex workflows rather than simply assisting employees. Early implementations are already delivering significant efficiency gains in areas such as documentation, compliance, and data processing, creating a growing competitive divide between firms that successfully embed AI into their operations and those still in the experimentation phase.
The productivity divide is also reshaping credit markets. Capital continues to flow towards technology and infrastructure businesses that can use automation to improve margins, while more labour-intensive sectors face mounting cost pressures. As investors reassess credit risk, companies unable to demonstrate productivity improvements may encounter tighter financing conditions and higher borrowing costs, reinforcing the importance of execution, not just investment, in the AI era.