The hype around generative AI has reached a fever pitch in recent months and for good reason as the industry has the potential to add $4.4 trillion to the global economy annually, a new McKinsey report argues. 

The report, which looks at the economic potential of generative AI, says it could add between $2.6 to $4.4 trillion to the global economy through "63 generative AI use cases spanning 16 business functions," which is roughly the same amount as the UK's GDP in 2021. 

Generative AI refers to conversational AI tools like OpenAI's ChatGPT released in November, which impressed the world with its wide-ranging abilities including creating content, generating music, and writing code. 

It became the fastest-growing app in Internet history after reaching 100 million users in just over two months and spurred the development of other AI tools like Google Bard and Microsoft's new version of Bing. 

The impact of generative AI is expected to be instrumental across all industries, especially in banking, high-tech, pharmaceuticals and medical products, and retail, McKinsey's report says. The technology could add $200 billion to $340 billion in value to the banking industry, and $240 to $390 billion in value in retail. 

Around 75% of the technology's value will be seen across four areas: customer operations, marketing and sales, software engineering, and research and development, the report noted. 

Its use cases in these industries range from automating conversations with customers, to creating personalized messages for customers, generating code, and even "generative design" which is "accelerating the process of developing new drugs and materials," per the report. 

The technology's improved ability to understand natural language has the potential to transform worker productivity by automating 60% to 70% of tasks that absorb employees' time currently. 

This would largely impact high earners like knowledge workers and could add "trillions of dollars in value to the global economy," McKinsey said.

Generative AI is predicted to become a $1.3 trillion market by 2032, up from $40 billion in 2022, according to a recent report by Bloomberg Intelligence viewed by Insider. According to Bloomberg's report, the industry will likely grow at a rate of 42% per year.