The USD 277bn impact of Artificial Intelligence in the GCC

With the impact of Artificial Intelligence (AI) being increasingly disruptive for governments and businesses globally, AI is expected to contribute up to USD 15.7 trillion to the global economy by 2030, according to PwC Middle East. GCC economies are already moving towards AI and advanced technologies with the economic impact of AI adoption being estimated at roughly 2% of the total, or USD 277bn.

According to PwC, AI is expected to contribute USD 135bn or 12.4% of GDP in Saudi Arabia by 2030 followed by the UAE with USD 96bn (13.6% of GDP), and the rest of the GCC countries with USD 45.9bn (8.2% of GDP. The average annual growth rate of AI’s contribution to the GCC is expected to range between 29-34% with the UAE recording the highest growth rate at 33.5% as well as the largest share of close to 14.0% of its GDP.

AI contribution to GCC by 2030

Source: PwC, Emirates NBD Research

With UAE and Saudi Arabia already demonstrating strong commitment towards AI development and implementation of AI technologies, the prospect of lower oil prices enhances the need for governments to seek alternative sources for revenue and growth. The development of non-oil sectors through investment in AI technologies could strategically position the GCC economies by pushing the boundaries of innovation across businesses and sectors. Both UAE and Saudi Arabia are placed within the top 60 countries in the world on the Global Innovation Index (GII) in terms of of their ability to innovate and the outputs of their innovation. The UAE ranked first in the GCC in 2017, moving up six places from last year while Kuwait improved the most in its overall GII ranking, moving up eleven places. The GII index measures the innovation performance of 127 economies and is a by-product of Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO).

Global Innovation Index (GII) 2017

Source: GII, Emirates NBD Research

Dubai leading the way for AI development in the UAE

The UAE launched its AI strategy in October last year aiming to boost government performance, adopt an integrated smart digital system and make the UAE the first in the field of AI investments in various sectors such as transport, health, space, rewenable energy, water, education and environment. The UAE’s commitment towards AI development was further enhanced with the appointment of the first minister of AI globally. Within the UAE, Dubai is leading the way with a number of related strategies including the Smart Dubai strategy, the Dubai 3D Printing strategy and the Dubai Autonomous Transformation strategy.Smart Dubai is aiming to transform Dubai through innovation and digital transformation with the launch of AI smart lab last year focusing on the training of both public and private sector employees in AI implementation. Moreover, the 3D Printing strategy is targeting Dubai’s construction sector with a goal of 25% of buildings in the emirate constructed using 3D printing technology by 2030. Last but not least, the Autonomous Transformation strategy targets to cut transportation costs by 44%, carbon emissions by 12% and accidents by 12% by transforming 25% of all transportation in Dubai to autonomous modes by 2030.

AI contribution to GDP by 2030

Source: PwC, Emirates NBD Research

AI adoption in construction and manufacturing to be the driver in the GCC

The biggest opportunity for AI in the GCC is in the construction and manufacturing sector where it is estimated that 31.0% of all AI investment in the region predicted for 2030, or USD 100bn, will be spent on developing AI solutions, according to PwC. This is followed by the energy, utilities and mining sector with USD 78bn (24.5%) and the public sector including education and healthcare with USD 56bn (18.5%). Overall, the potential gains at the industry level are likely to depend on the ability of businesses to automate processes, and on the potential  impact of further innovation due to AI. The former implies that labour intensive sectors, with greater scope of automation in sectors such as automotive and healthcare, are more likely to see the largest initial gains from AI. The latter suggests that sectors with compelling use cases in AI applications, such as healthcare (robo doctors, AI diagnostics), automotive (predictive engine monitoring, autonomous maintenance), financial services (automated insurance underwriting, machine-learning analytics), transport and logistics (autonomous tracking and delivery, automated picking in warehouses), etc, are more likely to innovate in early stages of AI development.

AI contribution to GCC* by industry by 2030, % of total USD 320bn

*Including Egypt

Source: PwC, Emirates NBD Research