The Middle East could add $232 billion to its gross domestic product by 2035 if governments and businesses adopt artificial intelligence (AI)-driven productivity gains while effectively managing the economic impacts of climate change, according to a report by professional services firm PwC.

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 AI adoption and decisive environmental action.

Countries in the Middle East are focusing on developing advanced technologies such as AI to diversify their economies and reduce dependence on oil revenues.

Saudi Arabia, for example, ranked 15th globally in research output in the sector, having produced 29,639 AI-related publications, highlighting its emerging role as a regional technology leader.

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 to 27.9 percent.

In the most optimistic scenario, widespread AI adoption through productivity gains combined with decisive climate action could lift GDP to $4.68 trillion.

The report emphasizes that industries will reconfigure to meet human needs in new ways, leading to the formation of new domains crossing traditional sector lines and creating opportunities for businesses and organizations to innovate their service and operating models.

Saudi Arabia is also spearheading climate efforts in the region through initiatives like the Saudi Green Initiative.

Balancing the cost and scalability of AI with clean energy availability will be crucial as AI adoption accelerates.

PwC called on governments, business leaders, and academia to take bold coordinated action to shape the Middle East's future, redesign institutions, strengthen supply chain resilience, and develop future-fit talent in strategic areas.