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RIYADH: The Middle East could add $232 billion to its gross domestic product by 2035 if governments and businesses harness artificial intelligence-driven productivity gains while managing the economic impacts of climate change.

In its latest report, professional services firm PwC stated that the region’s GDP is projected to reach $4.68 trillion by 2035, up from $3.57 trillion currently, in an optimal scenario driven by widespread adoption of AI and decisive environmental action.

Countries in the Middle East, including ������Ƶ, are heavily concentrating on developing advanced technologies such as AI, as they seek to diversify their economies by reducing their dependence on oil revenues. 

According to the Global AI Competitiveness Index released in January, the Kingdom ranked 15th globally in research output in the sector, having produced 29,639 AI-related publications. This ranking places it among the top contributors to global research and highlights its emerging role as a regional technology leader.

Reflecting on his company’s latest report, Stephen Anderson, chief strategy and technology officer at PwC Middle East, said the upcoming decade will challenge the region’s “imagination and capabilities” like never before.

He added: “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.” 

As part of its efforts to advance the growth of AI, ������Ƶ’s Public Investment Fund, in partnership with Google, launched Project Transcendence in 2024, a groundbreaking $100 billion undertaking. 

The initiative is set to bolster the growth of local tech startups, generate employment opportunities, and foster collaborations with global technology firms, positioning the Kingdom at the forefront of regional innovation.

PwC’s modeling shows that under a business-as-usual scenario, regional real GDP could grow by 41.8 percent by 2035. However, when factoring in climate-related risks — such as heatwaves, water scarcity, and flooding — this growth drops by 13.9 percentage points to a net increase of 27.9 percent, placing GDP at $4.57 trillion.

“At stake is $232 billion — the gap between the region’s most optimistic and constrained economic futures. In the most optimistic scenario, widescale AI adoption could add 8.3 percent through productivity gains; this, combined with decisive climate action could lift GDP to $4.68 trillion by 2035,” said PwC. 

The professional services firm added 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 organizations to reinvent themselves and target new client bases, form cross-sector alliances, and innovate their service and operating models.

“With bold climate commitments, access to the world’s lowest-cost renewable energy and rapidly advancing AI capabilities and infrastructure, the Middle East holds a unique strategic advantage and is well-positioned to lead the next wave of sustainable, tech-enabled economic growth,” said PwC. 

Despite being an oil-rich nation, ������Ƶ is spearheading climate efforts in the region. The Kingdom’s Saudi Green Initiative aims to plant 10 billion trees, rehabilitate 40 million hectares of degraded land, and reduce carbon emissions by more than 278 million tonnes per year.

The latest PwC report also highlighted the role of clean energy in powering AI and scaling innovation. 

“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,” said Yahya Anouti, partner at Strategy& and PwC Middle East sustainability platform leader. 

PwC also called on governments, business leaders, and academia to take bold, coordinated action to shape the region’s future. 

According to the analysis, governments should redesign institutions to meet evolving human needs by establishing ministries focused on care or mobility and creating dedicated funds to accelerate AI adoption in public services. 

Business leaders are being called upon to reinvent their operating models for a more localized, digital, and low-carbon economy, while strengthening supply chain resilience and fostering cross-sector alliances. 

Additionally, academia should anchor national progress by developing future-fit talent, advancing applied research in strategic areas, and embedding entrepreneurship across the education system, PwC concluded.

RIYADH: ������Ƶ’s National Development Fund has secured SR5 billion ($1.3 billion) in credit facilities through two agreements with Al-Rajhi Bank and Arab National Bank.

The deals are designed to enhance funding for key development projects across the Kingdom, empowering its 12 affiliated development funds and financial institutions to drive economic growth and accelerate national transformation, according to the Saudi Press Agency.

The agreements represent a strategic move in the NDF’s push to promote sustainable development and strengthen ������Ƶ’s private sector, reflecting the Kingdom’s increasing reliance on public-private partnerships to drive economic growth. This approach supports broader efforts to reduce government dependence and enhance private investment in key sectors, such as infrastructure, renewable energy, and technology.

The pacts were formalized during a signing ceremony at the fund’s headquarters in Riyadh. Khalid Shareef, vice governor of the NDF, said that the initiative aligns with the fund’s strategy to foster stronger partnerships between the government and private financial institutions. 

“The goal is to provide credit products to the development system through the fund and its associated development banks,” Shareef said. 

He added: “This will empower these institutions to effectively implement their strategic projects and expansion plans, thereby increasing their contribution to economic growth and supporting the objectives of Saudi Vision 2030.”

In a separate statement, Al-Rajhi Bank announced that the deal with NDF is valued at SR3 billion for a 12-month duration.

“The agreement aims to strengthen the support of development projects in the Kingdom and enable the development banks of the development system to achieve their development goals, contributing to enhancing economic growth and accelerating the pace of national transformation,” the statement said.

In a post on its official X account, the NDF said that the agreements are part of its “commitment to supporting development projects and empowering funds and banks within its ecosystem.”

Speaking to Arab News in February, Jaber Al-Salah, chairman of the academic chapter and member of the steering committee of the World Association of Public-Private Partnership Units and Professionals, explained how the deals align with the Vision 2030 drive to boost the private sector’s contribution to gross domestic product from 40 percent to 65 percent by the end of the decade. 

“PPPs offer several benefits to the private party, making them an attractive option for collaboration. These partnerships also support government objectives by improving public asset efficiency, enhancing service coverage, quality, and rationalizing spending,” he said.