Artificial intelligence (AI) is expected to significantly boost the Middle East’s economy, injecting an estimated US$320 billion by 2030.
This projection is part of a broader global impact of AI, which is anticipated to contribute up to US$15.7 trillion worldwide by 2030 through increased productivity and consumer benefits, according to a report by PwC.
The impact of AI in the Middle East will vary across industries, and gains will likely depend on two broad factors: first, the ability to automate processes, and second, sector-level use cases for product enhancement.
Labor-intensive sectors, such as retail and health, which have a greater scope for automation, are projected to see the largest initial gains from AI. These industries are expected to experience significant labor productivity benefits from AI adoption.
In retail, AI is expected to contribute 19% of the region’s GDP by 2030, the highest rate across all major sectors, amounting to US$23 billion. In the public sector, including health and education, AI is set to contribute 18.6% of GDP, equivalent to US$59 billion.
Finally, the sectors with the highest potential for product enhancements are identified as health, automotive and financial services.
In the transport and logistics sector, AI is projected to contribute 15.2% of GDP, equivalent to US$12 billion, while in financial services, the technology is expected to contribute 13.6% of GDP, equivalent to US$38 billion.
The annual growth in AI’s contribution to the Middle East’s economy is expected to range between 20-34%, with the United Arab Emirates (UAE) and Saudi Arabia leading this growth.
Saudi Arabia is projected to see the largest absolute gains from AI, with contributions exceeding US$135.2 billion to the economy by 2030, representing 12.4% of its gross domestic product (GDP). In relative terms, the UAE is expected to experience the largest impact, with AI contributing 13.6% of its GDP by 2030, or US$96 billion.
AI efforts in Saudi Arabia and the UAE
The large impact of AI in the UAE and Saudi Arabia can be attributed to their substantial investment in AI technology compared to other Middle Eastern countries.
In the UAE, AI is at the forefront of the government’s strategic plans. In October 2017, the government launched its national strategy for AI, aiming to boost government performance at all levels, integrate smart digital systems, and create new markets with high economic value.
Within the UAE, Dubai is spearheading AI initiatives with strategies such as the Dubai AI Roadmap, a comprehensive plan announced in June 2024 to establish Dubai as a global hub for AI by attracting top companies and talent in AI.
Other initiatives include Smart Dubai, a strategy introduced in 2014 that seeks to transform the city through innovation and digital transformation; the Dubai 3D Printing Strategy, targeted at the construction, medical products and consumer products sectors with a goal of having 25% of buildings in Dubai constructed using 3D printing technology by 2030; and the Dubai Autonomous Transportation Strategy, which aims to transform 25% of all transportation in the city to autonomous modes by 2030.
Similarly, Saudi Arabia has a clear vision for integration into its future development. The country’s Vision 2030, a plan unveiled in 2016 that aims to build a more diversified, innovative nation that empowers its people to thrive. 70% of the plan’s objectives are directly related to data and AI.
In 2019, the Saudi Data and AI Authority (SDAIA) was established to drive the national data and AI agenda as part of Vision 2030. In 2020, it unveiled the National Strategy for Data and AI to position the country as a global leader in AI. The plan focuses on skills development, policy and regulation, investment, research and innovation, and ecosystem development. It aims to attract US$20 billion in investments by 2030 and train 2,000 Saudi data and AI specialists over the next decade.
Most recently, the government announced plans to create a fund of about US$40 billion to invest in AI. The project reportedly involves talks between Saudi Arabia’s Public Investment Fund and Silicon Valley venture capital (VC) firm Andreessen Horowitz as well as other financiers.
AI spending in the Middle East on the rise
AI efforts in the Middle East are reflected by booming investment in the field. The International Data Corporation (IDC) estimates that spending on cognitive and AI systems in the Middle East and Africa (MEA) region grew from US$37.5 million in 2017 to over US$100 million by 2021, representing a growth rate of 32% a year.
According to the organization, the biggest opportunity for AI in MEA is in the financial sector where it is estimated that 25% of all AI investment in the region predicted for 2021, or US$28.3 million, were spent on developing AI solutions. This is followed by the public services, including education and healthcare, and the manufacturing sector.
Looking ahead, IDC expects AI spending in MEA and Turkey to soar at a five-year annual growth rate of 37%, with investments projected to reach US$7.2 billion by 2026.
Featured image credit: edited from freepik
