A new report has said the Middle East holds a strategic advantage as global systems are being reshaped by geopolitical uncertainty, trade disruptions, AI power dynamics, and the accelerating impact of climate change.
Middle East countries hold distinct advantages of access to the world’s lowest-cost renewable energy, bold climate commitments, a competitive AI infrastructure and government initiatives that strengthen future-focused sectors.
In its report, Value in Motion: The Middle East’s Time to Lead is Now, consultancy firm PwC said the above factors make Middle East best placed to become a global powerhouse and drive the next wave of sustainable, tech-enabled progress.
The report added that strategic AI adoption and climate resilience could add US$232 billion to the Middle East’s GDP by 2035. The total projected Middle East GDP in 2035 is expected to be US$4.57 trillion, nearly US$1 trillion larger than it is today.
PwC model estimates that in the most optimistic scenario, the potential AI boost to Middle East GDP over the next decade could add as much as 8.3 per cent to the GDP if adoption is widespread, responsible and focused on productivity gains. However, it added that the region also stands to lose 13.9 per cent of its GDP from physical climate risks – such as heatwaves, water scarcity and flooding.
PwC feels that over the next decade, industries will reconfigure to meet human needs in new ways, leading to the formation of new ‘domains’ that cross traditional sector lines. These shifts will create opportunities for businesses and organisations to reinvent themselves and target new client bases, form cross-sector alliances and innovate their service and operating models.
At stake is US$232 billion – the gap between the region’s most optimistic and constrained economic futures. The AI gains, combined with decisive climate action, could lift GDP to US$4.68 trillion by 2035.
Stephen Anderson, Chief Strategy & Technology Officer at PwC Middle East, said: “The decade ahead will challenge the region’s imagination and capabilities like never before. As the dynamics of the ‘three tomorrows’ unfold, they will reshape the Middle East’s economy.
“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 research introduces a new framework structured around emerging ‘domains of growth’ – such as how we move, fuel, build, care, compute and connect. These cross-industry ecosystems signal the future of value creation, replacing traditional sector silos with more dynamic, interconnected opportunities.
The report also highlights the role of clean energy in powering AI infrastructure and scaling innovation. As global hyperscalers ramp up their investments, the Middle East’s renewable energy advantage could help it become a regional and global hub for AI.
Dr Yahya Anouti, Partner at Strategy& and PwC Middle East Sustainability Platform Leader, said: “A critical factor will be how effectively the region balances the cost and scalability of AI with the availability and affordability of clean energy to power it – especially as AI adoption accelerates at an unprecedented pace. Striking this balance will be essential to unlocking the region’s full potential.”
The report called on governments, business leaders and academia to take bold, coordinated action to shape the region’s future. It urged governments to redesign institutions around evolving human needs – by establishing ministries focused on care or mobility and creating dedicated funds to fast-track AI adoption in public services and business leaders to reinvent operating models for a more localised, digital and low-carbon economy, while strengthening supply chain resilience and cross-sector alliances.
