Artificial Intelligence is a game-changer in the global economy. AI has massive potential and is estimated to contribute $15.7 trillion to the economy in 2030. This is more than the output of India and China combined. Let us talk about the potential impact of AI in the Middle East. Will AI be able to contribute US$320 billion by 2030?
Which Region will gain the most from AI?
The US$320 billion impact of AI in the Middle East
Since the onset of the fourth industrial revolution, businesses across the Middle East have started to shift their focus towards emerging and in-demand technologies such as Artificial Intelligence. Either they can move forward with the changing times or will be left behind. But taking a look at the economic impact in this area, it’s safe to say that being left behind is not an option. The Middle East is expected to accrue 2% of total global AI benefits in 2030, and this equates to US$320 billion.
The most number of gains are said to be accrued in Saudi Arabia. Here, AI may contribute over US$135.2 billion to the economy in 2030. This is equivalent to 12.4% of the GDP. An impact of close to 14% of the GDP is expected to be seen in the UAE. If the government continues to push the boundaries of AI and innovation, implementing it across different industries, the impact could be even larger.
Even if we consider the current relative investment in AI in Saudi Arabia and UAE compared to the rest of the Middle East region, the impact is greater. Both of these countries are among the top 50 countries globally when it comes to the Global Innovation Index.
We have seen the potential of AI. It can fundamentally create several new services and business models and opportunities. AI can also create new jobs, and we have seen this in the first wave of digitisation. With AI rapidly growing, we may be seeing several new companies and market leaders within the next five to ten years. To be a market leader tomorrow, you should set your strategies right today. If the Middle East region can meet its full potential and harness AI’s growth, it is safe to say that endless opportunities await.
How can the Middle East play to win?
These are the early stages of development. The world is shifting towards AI, and there is a huge opportunity at hand. If leveraged, there is a chance for this region to be a key player in the global market. The US$320 billion scenario takes into account the current implementations. However, there is scope to look into untapped opportunities that can help create a greater impact on the region’s economy.
The current situation
Several parts of the Middle East have already embraced AI and have started implementing digitisation methods. International Data Corporation or IDC conducted an analysis that estimated that the spending on artificial intelligence systems in the Middle East and Africa would grow from $37.5 million in 2017 to over $100 million in 2021. This would represent a growth rate of 32% per year.
After 2030, the scope of AI in the economy will certainly increase. Thus, the Middle East needs to create a strategic plan that can be laid out for the future.
The UAE, Qatar, and Saudi Arabia have already demonstrated a commitment to implement and develop AI technologies. Business organisations have invested in new technologies that are supported by the government. However, outside the gulf economy, adoption of AI has been slightly slower. The reason for this is that there is a certain discrepancy in infrastructure and access to skilled professionals.
Due to the volatility of oil prices, there is a toll on the region’s economic prospects. Because of this, the government must seek alternative sources of revenue. Investments in AI technology and non-oil sectors can help the region position themselves in the market for the upcoming years.
Artificial Intelligence at the industry level
The International Data Corporation or IDC conducted research that finds that the biggest opportunities for AI lie in the financial sector. 25% of all AI investments in the Middle East and African region for 2021, or close to $28.3 million will potentially be spent on developing AI solutions. Next comes the public services, which include healthcare and education, and then the manufacturing sector. At each industry level, the potential gain depends largely on these two broad factors.
1. Automating Processes
The retail and healthcare sector, which are typically labour intensive have a greater scope for automation. These sectors will see a larger benefit from Artificial Intelligence and will see a significant increase in their labour force productivity after adopting Artificial Intelligence.
2. Product enhancements with sector-level use cases
If a sector is already working with AI applications, they will likely innovate in the early stage of AI development. The data analytics team at PwC in the US has created an AI Impact index that conducts a quality assessment of the product enhancements expected by 2030. Close to 300 use cases have been identified with a scope for future product enhancements, be it in terms of personalisation or product quality. The healthcare, financial services and automotive sectors show the highest potential for growth and product enhancement.
Developing non-oil sectors by investing in the development and implementation of AI technologies can help the Middle East strategically position themselves for the years to come.
The wages associated with greater labour productivity also means there is higher consumer demand in these sectors. The direct or induced impact of artificial intelligence will be felt by all the organisations throughout the region and will add to AI’s economic impact.
The impact of AI can be seen across various regions and different industries of the world. If utilised properly, AI has a high potential and can increase productivity. If you wish to learn more about Artificial Intelligence, upskill with Great Learning’s Post Graduate Program in Artificial Intelligence & Machine Learning Course and unlock your dream career.0