LONDON: Embracing artificial intelligence technology could boost Gulf economies by $150 billion, equivalent to about 9 percent of their combined GDP, according to a recent report by Global consultancy McKinsey.
The research indicates that this estimate might be quickly surpassed, given the rapid advancements in technologies like generative AI.
Vinay Chandran, partner at McKinsey, underlined the transformative power of AI, saying: “With the rapid pace of technological innovation, AI has emerged as a transformative force, reshaping industries and societies.
“We believe it has the potential to deliver huge value in the Middle East’s GCC (Gulf Cooperation Council) countries.”
The consultancy firm conducted an online survey in collaboration with the GCC Board Directors Institute, involving 119 senior executives and board directors from six Gulf countries across various industries.
These industries included retail, professional services, energy, capital projects, and financial services.
While results show that AI uptake remains relatively low in the Gulf, it is still higher than in other regions.
In fact, 62 percent of respondents reported their organizations utilized AI in at least one business function, outpacing North America (59 percent), Europe (48 percent), and the Asia-Pacific region (55 percent).
As the Fourth Industrial Revolution unfolds, governments and businesses in the Middle East are becoming increasingly aware of the global shift toward AI and advanced technology.
However, the survey suggests that companies that are currently using AI have only just begun to explore the full potential of the technology.
Global consultancy PwC estimates that by 2030, AI could contribute $320 billion to economies in the Middle East, or 2 percent of the total global benefits of AI.
Annual AI contribution growth in the region is expected to range between 20 percent and 34 percent, with the UAE and Saudi Arabia leading the way.
Chandran noted that over the past five years, McKinsey’s research had revealed a striking difference between high-performing companies and their competitors, with the former deriving 20 percent or more of their earnings from AI.
He argued that for GCC companies to follow suit, they should focus on building AI capabilities in four crucial areas: strategy, organization and talent, data and technology, and adoption and scaling.
However, several respondents emphasized the significant challenges they face in developing AI capabilities due to various concerns.
To overcome the hurdles, the report advises companies to align their AI strategy with enterprise goals, cultivate AI talent, treat data as a product, and implement effective change management programs.
The UAE, for instance, has been making significant investments in AI and has even launched the Mohamed bin Zayed University of Artificial Intelligence to support the development of its AI ecosystem and promote research.
But while AI adoption in the GCC is “relatively encouraging,” McKinsey’s research suggests there is still a “significant” untapped value that companies can access.
Different sectors in the GCC are adopting AI at varying speeds, with retail leading the pack, as 75 percent of respondents in this sector reported implementing AI in at least one business function.