The UAE is emerging as one of the most prepared Gulf economies for artificial intelligence (AI) adoption, according to the International Monetary Fund (IMF). The country’s ongoing investments in technology, education, and infrastructure are paving the way for sustained economic growth.
Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, highlighted that the UAE, alongside Saudi Arabia and Qatar, is among the most ready for technological advancement. Speaking at a media briefing in Dubai, he emphasised that investments in AI, data centres, and next-generation internet technologies will be critical in shaping the region’s future growth. These investments are expected to drive economic development and attract further capital.
The Role of AI in Shaping the Future
Azour explained that the impact of AI would extend beyond the tech sector. “AI is going to change the way we work. Forty per cent of the labour force will be affected,” he said. He stressed that ensuring affordable access to technology for youth, start-ups, and small to medium-sized enterprises (SMEs) is crucial for fostering inclusive growth. Access to technology can improve financial inclusion, talent acquisition, and infrastructure development, all of which are key to stimulating wider economic advancement.
The IMF official also pointed out that education and skill development are pivotal in preparing the workforce for AI-driven change. “Investment in education and talent will be essential,” Azour stated. Ensuring that countries across the region have the right education systems in place is vital for expanding their technological capabilities and competitiveness.
The Gulf’s Resilience Through Crisis
Azour praised the Gulf Cooperation Council (GCC) countries for their resilience in the face of recent global crises, including the COVID-19 pandemic, the war in Ukraine, oil price volatility, and rising geopolitical tensions. He attributed this strength to years of structural reforms, which have improved market functioning, access to finance, and labour market conditions.
The UAE, in particular, has shown strong economic performance across both its oil and non-oil sectors, with notable contributions from services, tourism, real estate, and financial services. “The main driver of growth comes from the economic performance of Abu Dhabi,” Azour added. This diversification, coupled with prudent fiscal management, has contributed to the country’s ongoing economic success.
Financial Outlook and Future Risks
Despite the Gulf countries’ financial stability, Azour called for continued fiscal prudence. While the region remains liquid in the short term, the IMF warns that surpluses, including current-account and fiscal surpluses, are diminishing. The medium-term strategy should focus on diversifying revenue sources beyond oil, reinforcing fiscal policies, and deepening financial markets to mitigate risks related to debt and liability management.
Regional financing conditions remain favourable, with $48 billion in issues recorded by the end of September, exceeding the total for 2024. However, Azour urged governments to reduce financing needs, address outstanding debt, and maintain fiscal discipline to safeguard against future financial instability.
Emerging Opportunities and Regional Alliances
The Gulf region stands to benefit from shifting global trade routes and evolving regional alliances. Azour noted that Gulf economies have diversified their trade relationships, expanding both their import and export sources. Strengthening these business environments will attract further investment and talent. The region’s young, tech-savvy population more than two-thirds of whom are under 30 is seen as a key asset in this transformation.
In particular, the IMF sees Gulf countries positioning themselves as emerging middle powers in sectors like AI and technology. Strengthening regional alliances, especially in technology, will play an important role in these countries’ continued growth.
Conclusion
As the UAE and its Gulf neighbours continue to prioritise technological investment and education, their preparedness for the future is clear. With a focus on AI, education, and economic diversification, the region is setting itself up for a prosperous and competitive future. To sustain this momentum, careful management of financial resources and fostering innovation through strategic alliances will be essential.
For more insights into regional developments, see Qatar stresses importance of the Gulf role in regional stability and Three Innovators from Saudi Arabia, Algeria, Jordan compete for Stars of Science title.
