RIYADH: Strategic adoption of artificial intelligence and climate resilience measures could contribute an additional $232 billion to the Middle East's economy by 2035, according to a report by PwC. The professional services firm highlights that AI-driven productivity improvements, coupled with focused environmental strategies, are expected to significantly boost the region’s GDP, taking it to an estimated $4.68 trillion by 2035, compared to the current figure of $3.57 trillion.

PwC’s analysis underscores the growing importance of AI as a key driver of economic transformation. The report suggests that the Middle East has the potential to unlock vast economic value through both the development and adoption of AI technologies across various sectors, including healthcare, manufacturing, finance, and energy. AI’s role in enhancing operational efficiencies, optimising resources, and streamlining processes can yield substantial financial returns for businesses and governments alike.

The consultancy firm stresses that AI adoption in the region, particularly in emerging markets, can address critical challenges such as labour shortages, urbanisation, and the growing demand for digital services. Automation, data analytics, and machine learning are expected to improve productivity and innovation across these industries. This shift is not just about replacing jobs; rather, it’s about augmenting human capabilities and fostering new opportunities for highly skilled roles that can fuel long-term growth.

Simultaneously, the region faces increasing pressures related to climate change. The impacts of environmental risks, such as rising temperatures, water scarcity, and extreme weather events, could slow down economic progress unless there is a concerted effort to integrate climate resilience into regional development strategies. PwC points out that adopting green technologies and mitigating climate-related disruptions will be pivotal to maintaining robust economic growth in the Middle East.

Governments have already started to take proactive measures, with many regional nations making substantial investments in sustainability initiatives, renewable energy, and carbon-reducing technologies. These investments, while addressing environmental risks, will also create new industries, job opportunities, and business models that contribute to long-term economic stability. For instance, the growth of the renewable energy sector, particularly solar power, could be a major contributor to the region’s GDP increase by offering both environmental and economic benefits.

PwC’s report also highlights the need for effective public-private partnerships to realise this economic potential. Governments will need to create the right policies and frameworks that incentivise businesses to adopt AI and sustainability initiatives. This could include providing financial support for innovation, implementing regulations that promote green technologies, and investing in education and workforce development to equip citizens with the skills required to thrive in a digital and sustainable economy.

In the AI domain, the report anticipates the development of regional hubs focused on cutting-edge technologies, positioning the Middle East as a global leader in digital transformation. These centres of innovation could attract investments from tech giants and startups alike, with the potential for groundbreaking advancements in AI applications tailored to regional needs, from smart cities to health tech.

However, while the opportunities are vast, challenges remain. The region will need to address issues such as data privacy, cybersecurity, and digital infrastructure to ensure that AI adoption is both ethical and secure. Moreover, ensuring that the benefits of AI and climate resilience are equitably distributed across all sectors and demographics will be crucial to preventing widening inequalities.