From Davos to the Middle East: The High-Stakes Game for Business

Economic fragility. Climate risks. Displaced talent. The global economic landscape is transforming at an unprecedented pace. Nations are redrawing trade alliances, turning climate commitments into financial imperatives, and actively redistributing economic power on a transformative scale.

Davos 2025 delivered a strong message. While much of the global narrative revolved around economic fragility, artificial intelligence, and the accelerating pace of climate change, the Middle East arrived with a message of resilience, strategic adaptability, and a firm eye on the future. The region, long defined by its hydrocarbons, is increasingly positioning itself as a hub for AI-driven economies, green energy innovation, and a critical node in a shifting global trade landscape.

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AI: savior or villain

Artificial intelligence dominated conversations at Davos and for good reasons. The technology is poised to reshape industries, redefine employment, and challenge regulatory frameworks worldwide.

Goldman Sachs predicts AI could contribute?$7 trillion?to global GDP over the next decade, yet concerns over job displacement and misinformation persist. The reality? AI is neither a savior nor a villain—it’s a tool. And like any tool, its impact depends on how we wield it.

For the Middle East, AI is a strategic imperative. With governments investing heavily in AI infrastructure, national strategies, and regulatory sandboxes, the region seeks to shape the future of AI.

The UAE, for instance, was the first country to appoint a Minister of AI, underscoring its intent to lead rather than follow. Saudi Arabia’s Vision 2030 places AI and digital transformation at its core, with investments flowing into smart cities, autonomous mobility, and next-generation data ecosystems. Meanwhile, Qatar is building AI-focused academic and innovation hubs, positioning the region at the forefront of developing AI solutions.?

What is at stake??As nations accelerate their AI adoption, one pressing question looms: Will AI empower the workforce or render it obsolete? The answer hinges on investment in upskilling.?

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Global Trade and the Middle East’s Strategic Positioning

Davos underscored that trade is now about resilience, not just efficiency. While nearshoring and regional trade blocs are gaining momentum, the U.S. is doubling down on tariffs and supply chain protectionism, which is reshaping the global economic order.

What does this mean for the Middle East as a strategic trading hub? Gulf states are deepening ties with Asia, and investing in logistics, positioning the region as an indispensable player in the global supply chain. Middle Eastern economies are capitalizing on their geographic advantage to become central to international trade flows.

Additionally, the digital economy and fintech revolution in the region are accelerating cross-border commerce, with governments actively fostering innovation-friendly regulations. The region’s trade policies are becoming more sophisticated, balancing traditional alliances with new economic realities.

The GCC has long thrived as a global trade hub. The UAE is already a?top 10 logistics hub, and Saudi Arabia is investing more than?$9 billion?to strengthen its supply chain resilience and enhance global trade connectivity.?

What is at stake??Countries that establish themselves as indispensable players in diversified trade routes will dictate the next decade of global commerce.

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Climate Change: Action is Expensive

Climate change remains one of the defining challenges of our time, and Davos once again highlighted the urgency of the issue. The Middle East is increasingly proving that it understands the need for sustainable solutions—not just as a global responsibility but as an economic opportunity.

The UAE’s push into clean hydrogen and Saudi Arabia’s commitment to the Circular Carbon Economy signal a pragmatic approach to the energy transition.?

At Davos, discussions centered around the role of finance in supporting this shift, and here, the region has a distinct advantage: sovereign wealth funds and national investment vehicles are deploying capital to ensure that the energy transition is not an abstract goal but a tangible economic driver.

What is at stake??The challenge remains execution. Moving from large-scale announcements to on-the-ground impact will define the success of these strategies. And while Western economies debate the feasibility of green commitments, the Middle East is increasingly focusing on scalable solutions, leveraging its financial muscle to build the infrastructure needed for a post-oil era.

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The Path Forward: React or Lead?

The message from Davos 2025 is clear: The world is shifting fast. AI, trade realignment, sustainability, and economic shifts aren’t just trends—they’re redefining global power structures.

For the Middle East, the choice is simple: react to change or lead it. The region has the capital, the ambition, and the talent to shape the future—but only if it moves from vision to execution. AI needs skilled workers, trade needs strategic positioning, and sustainability needs real investment. This isn’t just about keeping up; it’s about setting the pace.

The next decade will belong to those who act boldly.?

#AI #Sustainability #TradeTransformation #GCC2030

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Q&A with Joerg Hildebrandt Managing Director & Senior Partner; Global Leader, Public Sector Practice

1. AI is at the heart of global economic transformation. How can Middle Eastern governments ensure AI becomes a driver of economic growth rather than a disruptor of jobs?

The Middle East is in a unique position to shape AI’s economic impact?as it is building its digital economy.?This provides an opportunity to integrate AI into growth strategies.

Governments must focus on three key areas:

• Upskilling the workforce?– AI will create new jobs just as it displaces others. Countries must invest in AI-driven education, coding academies, and advanced research hubs to prepare their workforce for the jobs of the future.?At BCG we work with the 10-20-70 model. 10% of efforts go into Algorithm design, 20% into data excellence, and 70% comes down to people and organization. The latter is a key success factor.
• -Regulatory leadership?– The UAE and Saudi Arabia have already pioneered AI-friendly regulations. This needs to be expanded regionally to attract global AI firms and ensure ethical, transparent AI deployment.
• Public-private collaboration?– AI innovation thrives when the government and private sector work together. By funding AI startups, incubating talent, and ensuring responsible AI deployment, Middle Eastern economies can position themselves as global leaders rather than followers in the AI race.

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2. The Middle East is positioning itself as a global?trade & logistics?hub, but how can governments ensure long-term resilience amid rising geopolitical uncertainty?

Trade resilience isn’t just about infrastructure—it’s about strategy. The Middle East is already a global logistics powerhouse, but in a world where supply chains are shifting due to protectionism and geopolitical risks, governments must move beyond being transit hubs and become indispensable economic partners.

?Key actions include:

• Diversifying trade partnerships?– Strengthening trade ties with?many country partners ensures that?the region is not over-reliant on?a few markets only.?The GCC’s deepening economic engagement with China and India is a step in this?direction.
• Investing in digital trade infrastructure?– E-commerce, blockchain-based logistics, and fintech solutions will define the future of global trade. Governments must accelerate digital transformation across ports, customs, and payment systems.
• Supply chain localization?– The region must move from being a trade corridor to a manufacturing and processing hub. With supply chains fragmenting globally, the GCC can attract investment in high-tech manufacturing and value-added industries.

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3. Climate action is now an economic necessity, but how can the Middle East balance sustainability with continued economic growth?

The region’s energy transition is no longer just about meeting climate targets—it’s about future-proofing the economy.?The Middle East has an opportunity to lead?in Innovations in desalination, solar power,?and sustainable urban development.?By treating climate action as an economic driver rather than a regulatory obligation, the Middle East can lead in shaping a sustainable and profitable future.

In Numbers: Three?numbers telling the?story of transformation, urgency, and opportunity: