Strategic adoption of AI and sustainability may add $232 billion to Middle East GDP by 2035: PwC
Doha
Strategic adoption of Artificial Intelligence (AI) and decisive climate action could unlock as much as $232 billion in additional economic value for the Middle East by 2035, according to a new report released by PwC Middle East.
The study, titled 'Value in Motion: The Middle East's Time to Lead is Now', outlines three future scenarios that explore the region's potential economic trajectory amid accelerating AI disruption, climate-related risks, and the convergence of traditional sectors into new, dynamic domains of growth.
The research reveals that under an optimal scenario, the region's GDP could reach $4.68 trillion by 2035, up from $3.57 trillion today—an increase of $1.11 trillion. A significant portion of this growth, about 8.3 percent, could be attributed to AI-driven productivity gains if adoption is widespread, responsible, and strategically focused.
However, physical climate risks such as rising temperatures, water scarcity, and flooding could erode up to 13.9 percent of GDP potential, highlighting the importance of integrated action across both AI and climate agendas.
Under a business-as-usual approach, the region's real GDP is projected to grow by 41.8 percent, reaching $4.57 trillion by 2035. But when adjusted for climate-related losses, the net growth would fall to 27.9 percent, emphasising the urgent need for proactive, coordinated strategies to mitigate these risks.
'The decade ahead will challenge the region's imagination and capabilities like never before,' PwC Middle East Chief Strategy & Technology Officer Stephen Anderson said. 'To stay ahead, businesses and governments must act with pace, purpose and partnership—reimagining traditional models to unlock the competitive advantage the region is uniquely positioned to deliver.'
The report introduces a forward-looking framework centered on emerging domains of growth—such as how we move, fuel, build, care, compute, and connect—which break down traditional industry silos and open up cross-sectoral value creation. These domains are expected to define the next wave of regional transformation, as organizations pursue more integrated, human-centric strategies.
The Middle East, with its world-leading renewable energy potential and rapid digital infrastructure development, is uniquely poised to lead in this new era. The convergence of clean energy and AI is seen as a pivotal opportunity to position the region as a global AI hub, particularly as global hyperscalers increase investment in digital infrastructure.
'A critical factor will be how effectively the region balances the cost and scalability of AI with the availability and affordability of clean energy,' said Dr. Yahya Anouti, Partner at Strategy& and PwC Middle East Sustainability Platform Leader. 'Striking this balance will be essential to unlocking the region's full potential.'
The report calls on governments, businesses, and academic institutions across the Middle East to take bold and coordinated steps to secure the region's economic future. Governments are encouraged to restructure institutions to meet evolving human needs—such as by creating ministries dedicated to mobility or caregiving, and by establishing innovation funds to accelerate AI integration in public services. Businesses are urged to rethink their operating models to thrive in a digital-first, low-carbon economy and to build more resilient, collaborative supply chains.
Meanwhile, academic institutions must play a leading role in cultivating a workforce equipped for future challenges, advancing applied research in strategic sectors, and embedding entrepreneurship across the educational spectrum.
With visionary leadership, cutting-edge digital capabilities, and abundant clean energy resources, the Middle East is uniquely positioned not just to adapt to global change, but to lead it. PwC's report concludes with a call to action: the value is already in motion—now is the time to act.
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