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The Middle East’s digital economy to climb up to $780 billion by 2030

This growth in the region’s digital economy will outperform the global average.

The Middle East’s digital economy to climb up to $780 billion by 2030
[Source photo: Pankaj Kirdatt/Fast Company Middle East]

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Surpassing the global average, the Middle East’s digital economy will increase to nearly $780 billion by 2030, from $180 billion in 2022, signifying an annual growth rate of more than 20% throughout the decade, according to Swiss bank UBS. 

The global digital economy’s revenue recorded $10.5 trillion in 2022, with a projected growth to about $23.2 trillion by 2030, a CAGR of 10.4%. By 2030, the Middle East’s digital economy will be valued at 13.4% of its GDP, which is 4% higher than last year and follows the US, where the sector accounts for 15% of its GDP.

The report states that although the region is at its early stages of digital ascent compared to the global economy, it has secured investments that have made it one of the fastest-growing economies in the world. 

Similarly, the region stands where China did ten to 15 years prior and where India was five to ten years ago when the digital economy began growing in those countries.

UBS sections the digital economy into two pillars: traditional IT spending, whereby consumers and enterprises spend on hardware, software, and services, and internet economy spending, including e-commerce, digital advertising, online gaming, FinTech, and much more.

“Supported by favorable demographics, strong policy support, solid funding, rising innovation, and low penetration rates, we expect the Middle East’s digital economy to grow,” says UBS. 

Interest from investors is also expected to increase for the rest of the decade. UBS analysts suggest software, internet, and data centers as segments investors should have their eyes on.

“There are two ways to participate in the Middle East’s rapidly growing digital economy – investing in the right industries or the right companies,” said the UBS analysts, adding, “For industries, we recommend investors to consider those that can grow faster and also can generate higher margins.”

Software is exceptionally prominent, projected to reach 15% CAGR over the decade. Software operating margins can climb as high as 35% to 40% and drive rich profit growth.

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