UAE AI ambitions: Building the foundations of the next economic growth era

Over the past three decades, the UAE has transformed itself into one of the most diversified economies in the MENA region, building its growth on a foundation of non-oil trade, logistics, manufacturing, infrastructure, tourism and construction. By 2024, non-oil sectors contributed 75.5% of GDP, with trade accounting for 16.8%, manufacturing 13.5%, financial services 13.2%, construction 11.7% and real estate activities 7.8%. This broad economic base has made the country a magnet for foreign direct investment, ranking second in the world for the number of FDI greenfield projects in 2023 with nearly 1,280 initiatives launched.

Now the UAE is preparing for its next major economic wave, anchored in advanced technology and, in particular, artificial intelligence (AI). The global AI industry is expanding at an unprecedented rate: worldwide spending on AI systems reached $154 billion in 2023 and is forecast to approach $300 billion by 2026, sustaining double digit growth from around $120 billion in 2022. Estimates show that generative AI could add between $2.6-4.4 trillion in value each year once fully scaled, while it could boost global GDP by roughly 7% over a decade and lift labour productivity growth by about 1.5 percentage points.

For the UAE, the leap into AI is backed by comparative advantages, including a reliable supply of clean power, hyperscale cloud infrastructure, deep integration of AI across public and private sectors, and a strategic location linking markets across three continents. Its National Programme for AI, launched in 2017 and expanded through the National Strategy for AI 2031, is targeting applications in transport, healthcare, space and energy, alongside an emphasis on local research and commercialisation. The wider Digital Economy Strategy seeks to raise the sector’s share of GDP from about 10% in 2022 to 20% within a decade, making AI a core structural driver of non-oil growth.

Partnerships with global technology leaders are reinforcing this trajectory. In April 2024, Microsoft invested $1.5 billion in Abu Dhabi-based G42, taking a minority stake and a seat on its board to co-develop AI solutions using Microsoft Azure across the Middle East, Central Asia and Africa. Meanwhile, Abu Dhabi inaugurated the UAE-US AI Campus, home to “Stargate UAE”, which will be the largest AI data centre complex outside the US. Led by G42 with partners including OpenAI, Oracle, NVIDIA, Cisco and SoftBank, the multi-phase hyperscale hub will provide the infrastructure for AI model development, training and inference, while integrating renewable energy sources and advanced cooling systems to reduce its environmental impact. The facility will also house research and development centres and training programmes to expand the local AI talent pool, with early projects expected in government services, healthcare, energy, finance and logistics.

Projections indicate that AI will play an increasingly pivotal role in the UAE’s economic future. According to recent forecasts, AI could contribute around 14% of national GDP by 2030, as adoption expands across sectors including healthcare, education, transport, energy, and smart city systems. The domestic AI market, valued at about $3.47 billion in 2023, is projected to grow to roughly $46-50 billion by 2030, reflecting a compound annual growth rate of about 43.9%.

To ensure these gains are widely shared, the UAE is investing heavily in AI-focused skills development. Flagship programmes include the Dubai Centre for Artificial Intelligence’s “One Million Prompters” - a three-year global initiative launched in 2024 to train one million people in AI prompt engineering - and the federal “One Million AI Talents in the UAE” initiative, announced in partnership with Microsoft in 2024, which aims to equip government teams with future-ready AI skills by 2027. Together, these efforts are designed to build an AI ready workforce and embed AI capabilities deeply into the labour market. Taken as a whole, the UAE’s efforts position AI not merely as the next technological step, but as a cornerstone of its post-oil economic model - one built to deliver innovation-driven, sustainable, and human-centred growth well into the future.

Ahmed El Safty is an economic advisor at the Emirates Centre for Strategic Studies and Research (ECSSR) in Abu Dhabi.