Artificial Intelligence (AI) is going to be a huge game changer in the global economy, with a lot of money to be made. It is anticipated that by 2030, AI will have contributed $15.7 trillion to the global economy, more than China and India combined. $6.6 trillion is expected to come from higher production, whereas $9.1 trillion is expected to come from consumer gains.
AI’s 320-billion-dollar impact on the Middle East
Governments and businesses across the Middle East are beginning to recognise the worldwide move toward AI and sophisticated technologies in the aftermath of the fourth industrial revolution. They must decide whether to participate in the technological upheaval or risk being left behind. When it comes to the region’s economic influence, being left behind is not an option. In 2030, the Middle East is predicted to get 2% of the overall global AI advantages, according to the estimates. This equates to approximately US$320 billion.
In terms of absolute advantages, Saudi Arabia is predicted to benefit the most, with AI expected to contribute over US$135.2 billion to the economy by 2030, comparable to 12.4 percent of GDP. In terms of GDP, the UAE is predicted to have the greatest influence, accounting for over 14% of global GDP in 2030.
The region’s yearly increase in AI contribution is predicted to range between 20 and 34 percent per year, with the UAE leading the way, followed by Saudi Arabia.
Given their relative investment in AI technology compared to the rest of the Middle Eastern region, the magnitude of the impact expected in these two economies is unsurprising – both countries rank among the top 50 countries in the world on the Global Innovation Index 2017 in terms of their ability to innovate and the outputs of their innovation.
Through the invention of innovative new services and altogether new business models, AI has the potential to radically disrupt markets in the Middle East. The initial wave of digitalization has already had an impact. Some of the industry leaders in ten, even five years’ time may be companies you’ve never heard of, thanks to AI’s explosion.
Today’s market leaders are likely to be pondering alternatives and formulating tactics.
In the current scenario, the area will be able to profit from the AI phenomena and pump US$320 billion into the economy. There is so much more ‘up for grabs’ and countless opportunities if governments and corporations foster and develop AI to its full potential.
The world is going towards AI, and the area has an opportunity to become a vital role in the global agenda at this early stage of development. Our ‘US$320 billion scenario’ takes into account the current state of affairs in the region. However, there are more unexplored prospects that couldThe current state of play
Parts of the region have already embraced artificial intelligence (AI) and the new digital era. According to a study performed by the International Data Corporation (IDC),4 spending on cognitive and artificial intelligence (AI) systems in the Middle East and Africa (MEA) region will rise from $37.5 million in 2017 to more than $100 million by 2021, reflecting a 32 percent annual growth rate.
The United Arab Emirates, Saudi Arabia, and Qatar, in particular, have shown a strong commitment to AI development and application. Businesses in certain sections of the region have been inclining towards new technologies. Among the initiators, is the government, becoming early adopters and thereby encouraging the investment further. However, adoption has been slower outside of the Gulf economies. Differences in adoption levels are caused by factors like as infrastructure and access to skilled labour, both of which are important enabling elements for AI development.
Another point to consider is that while oil price volatility is burdening the region’s economic prospects, it’s forcing governments to look for alternate sources of revenue and growth. Investment in artificial intelligence (AI) to promote non-oil sectors could help the region position itself strategically in the years ahead.
AI at the industry level
The adoption potential of AI differs per sector. According to research conducted by the International Data Corporation 11, the financial sector in the Middle East region offers the biggest opportunity for AI, with 25% of all AI investment in the region expected for 2021, or $28.3 million, going toward developing AI solutions. The manufacturing sector is followed by the public sector, which includes education and healthcare.At the industrial level, prospective profits are likely to be determined by two primary factors:
The ability to automate processes:
Retail and health care, both of which have a lot of room for automation, are likely to reap the biggest gains from AI at first. AI adoption is predicted to boost labour productivity in several areas significantly.
Sector-level use cases for product enhancement:
In the early stages of AI development, sectors with compelling use cases in AI applications are more likely to innovate. The AI Impact Index12 was developed by PwC’s Data Analytics division in the United States after completing a qualitative review to determine the size of product advances we may expect by 2030. The study looked at nearly 300 use scenarios to see where there was room for product improvements such as personalization, product quality, and time savings for consumers, as well as more product diversity. The health, automotive, and financial services sectors have the biggest potential for product advancements, according to the score.
Despite the larger potential for direct gains in specific industries, the gains are unlikely to be concentrated in the industries that develop and use AI technologies. As these industries grow as a result of AI’s direct effects, their demand for inputs from other industries will grow as well. Similarly, the higher pay linked with better labour productivity in these industries will boost consumer demand across the economy. These indirect and induced effects of AI are expected to be felt by businesses and consumers across the economy, and they will contribute to AI’s overall economic impact.