Sundeep Gantori Michael Bolliger

We estimate the Middle East’s digital economy will grow from USD 180bn in 2022 to USD 780bn in 2030, or roughly 20% growth p.a. This would make the Middle East one of the fastest-growing digital economies globally. Our estimates may prove conservative as the digital economy penetration as a percentage of the region’s GDP is expected to rise from 4.1% in 2022 to 13.4% in 2030, which is still below today’s 15% or so penetration levels in advanced economies like the US.

The current state of the Middle East’s digital economy
Based on data from World Bank, Gartner, Bloomberg Intelligence, and UBS estimates, the size of the Middle East’s digital economy was close to USD 180bn in 2022, or 4.1% of the region’s economy. The Middle East digital economy's penetration of only 4.1%—versus 10.5% globally, 15% in the US, and 7.4% in India (an economy with comparable size)—highlights the region's significant medium- to long-term growth potential.

Another way of looking at penetration rates is to compare the current size of the Middle East’s technology markets with the global levels. As seen in the figure below, compared to the Middle East’s GDP penetration of 4.1%, its technology penetration across segments is less than 2%—except for hardware (3.3%), which is understandable given the mature smartphone and personal computer (PC) spending in the region. 

How Middle East’s key tech segments stack vs the overall global market

Penetration based on revenues in Middle East vs global markets in 2022 (%)

Source: World Bank, Gartner, Bloomberg Intelligence and UBS estimates as of Aug 2023

However, the overall low penetration rates highlight the strong long-term growth potential of the Middle East’s digital economy, including in high-margin segments like software, internet, and others in the future which we address in the next few segments.

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