- The organization's deputy head of the Middle East and Central Asia department said: “We are seeing rapid progress in the region as a whole, which cannot be said about other parts of the world.”
- The organization's deputy head of the Middle East and Central Asia department said: “We are seeing rapid progress in the region as a whole, which cannot be said about other parts of the world.”
RIYADH: There is a positive correlation between digitalization and improved macroeconomic conditions in the Gulf Cooperation Council economies, according to a report by the International Monetary Fund’s Middle East and Central Asia Department.
At a roundtable in Riyadh on Thursday, the department's deputy director, Zein Zeidan, spoke about the rapid digital development that has taken place in the GCC region in recent years and the significant support this has provided to both the public and private sectors.
“The region is going through a very interesting economic transformation,” he said.
The IMF examined how digitalization is now a key element of GCC countries' national visions, he continued, and has become a critical factor in efforts to grow gross domestic product, streamline government operations, improve living standards, and accelerate national connectivity.
Zeidan highlighted the accelerated digitalization process in the region following the COVID-19 pandemic, which he said was reflected in areas such as telemedicine, digital banking, e-commerce and virtual courts.
“From 2020 to now, we have seen rapid progress in this region as a whole, which is not seen in other parts of the world,” he said. “And on average, this is a region that is even significantly ahead of the aggregate.”
At the same time, the IMF made recommendations to further strengthen digitalization efforts in the region’s public and private sectors. In the former, for example, digital engagement with citizens and the digitalization of key government systems should be strengthened. In addition, data privacy laws and cybersecurity guidelines should be reviewed and updated to reduce risks and promote trust. Regulations that can complement the evolving digital industry should also be implemented uniformly across the region.
In the financial sector, the benefits of digital payments and e-commerce should be promoted, as well as industry-specific developments in financial technology that can stimulate competition. Cross-border cooperation and payments are also recommended to scale markets.
In the corporate and labor market sectors, the IMF recommended that small and medium-sized financial enterprises learn to adopt new technologies and continuously improve their skills. It also recommended targeted investments in digital infrastructure, industry, and innovation.
In addition, in the corporate and labour markets, special attention should be paid to education and training to improve digital skills, especially given the potential changes expected in the labour market as a result of advances in artificial intelligence.
“The history of technology over the last few decades has shown that there has always been job creation,” Zeidan said. “So in some places you lose jobs, in some places you create a lot of jobs.”
Asked by Arab News if there were concerns about the loss of educational and career diversity, or that creativity and critical thinking skills could be sidelined by the focus on digital education, he said AI would not replace human thinking.
The idea, he explained, is to use AI “to develop creativity” rather than “to replace your thinking.” He predicted that the biggest challenge would be to build digital skills into the education system while preserving human creativity and thinking.
Saudi Arabia’s GovTech Maturity Index score increased from just over 0.7 to just under 1.0 between 2020 and 2022, putting it at the highest level among GCC countries, followed by the UAE and Qatar. The index, which measures countries’ maturity in terms of government digital transformation, has a regional average of 0.85.
While the GCC region is among the best in the world in terms of digital connectivity, some individual countries could benefit from upgrading their skills in advanced information and communications technology, Zeidan said. Many people have basic skills, but advanced knowledge is still lacking, he added. However, the region’s advanced infrastructure gives GCC countries the opportunity to improve digital skills and integrate industry.
Despite the positive developments, the region still has some catching up to do.
“The contribution of the digital economy to GDP overall… is still much slower in Saudi Arabia, which is the most advanced in the region, compared to the United States,” Zeidan said.
On the other hand, efforts to ensure digital access are yielding good results: GCC countries are closing the gap with advanced economies around the world, as shown by the IMF’s recently launched Enhanced Digital Access Index, which measures various aspects of a country’s digital infrastructure and inclusiveness.
The contribution of the digital economy to Saudi Arabia jumped by 2.9% between 2017 and 2020. According to the index, the digital economy contributed SR73 billion (US$19.5 billion) to GDP during this period through the use of digital infrastructure.
Zeidan also recommended additional efforts in the areas of digital innovation and regulation to further enhance GCC countries' readiness for advances in AI.
