Singapore's Digital Economy Hits S$144.1B as AI Adoption Doubles

There is a number that stops you: 23.5 per cent. That is the share of Singapore enterprises that had adopted artificial intelligence by 2025, up from 14.7 per cent just twelve months earlier. Nearly one in four businesses, where barely one in seven stood before. The shift is not incremental. It is structural, and it is moving faster than most institutional forecasts anticipated.

Singapore’s digital economy reached S$144.1 billion in 2025, equivalent to roughly US$112.4 billion, according to the Singapore Digital Economy Report released by the Infocomm Media Development Authority (IMDA) on 5 October. That figure represents 19.3 per cent of gross domestic product, up from 18.8 per cent the previous year, and a year-on-year expansion of 5.6 per cent — nearly double the nominal GDP growth rate of 3.1 per cent over the same period. The digital economy, in other words, is not merely keeping pace with Singapore’s broader economic engine. It is outrunning it.

The composition of that growth matters as much as the headline. Non-information and communications sectors — manufacturing, finance, healthcare, logistics — account for more than two-thirds of the digital economy’s value, with nominal value-added from digitalisation in these sectors rising 3.6 per cent year-on-year to S$97 billion. The information and communications sector itself grew at a faster clip, 6.1 per cent, reaching S$47.1 billion. What this dual expansion reveals is that Singapore’s digital story is no longer confined to a technology enclave. It has diffused into the fabric of the broader economy, which is precisely what industrial policy here has long intended.

Tech employment followed the same trajectory. The workforce in tech roles grew 3.8 per cent year-on-year to 222,200 in 2025, with the fastest growth concentrated in AI, data and cybersecurity occupations. Tellingly, non-I&C sectors led tech employment growth at 5.3 per cent, against 1.8 per cent in the I&C sector itself — a pattern that underscores how demand for technical capability is now most acute outside the industry that traditionally produced it.

The AI adoption figures deserve careful reading rather than reflexive celebration. The jump from 14.5 per cent to 23.4 per cent among small and medium enterprises is significant, but context is necessary: the vast majority of these firms — almost nine in ten — are deploying commercial off-the-shelf tools such as ChatGPT, Claude, Gemini or Microsoft Copilot. These are accessible, low-friction entry points, not deep integrations. Only 28.3 per cent of AI-adopting enterprises have moved to customising AI tools for their specific needs, and two in five report that they are either expanding deployment or have fully integrated the technology across operations. The gap between surface-level adoption and meaningful transformation remains wide.

That said, the reported outcomes are not trivial. IMDA found that 87.6 per cent of AI-adopting enterprises cited productivity and process improvement as a key benefit, while 44 per cent reported cost reduction and resource optimisation. SMEs that adopted AI-enabled solutions through the Productivity Solutions Grant reported average cost savings of 49.5 per cent in 2025 — a figure striking enough to warrant scrutiny of methodology, though IMDA presents it without qualification. Singapore’s enterprise AI adoption rate among firms with ten or more staff stood at 34.6 per cent in 2025, well above the OECD average of 20.3 per cent, positioning the city-state among the more aggressive adopters in the developed world.

At the individual level, 86 per cent of workers in Singapore reported using AI at work in 2026, up from 78 per cent the year before. Among them, 73 per cent cited productivity improvements, 69 per cent better work quality, and 68 per cent stronger problem-solving capacity. Roughly six in ten of those who saved time estimated gains of up to one hour per day. Content creation dominated use cases at 77 per cent, followed by process automation and data analytics. These are not marginal shifts in how work gets done.

Yet the training gap is where the report’s more uncomfortable findings surface. Some 68 per cent of workers acknowledged the need to upskill or reskill in AI, but only 37 per cent had attended any AI-related training in the preceding twelve months. Of those who had not, approximately 35 per cent were simply not nominated by their employers — a structural problem, not a motivational one. A similar proportion cited lack of time, and about one in four did not know which course to pursue. The ambition is present. The infrastructure to convert it into capability is lagging.

IMDA’s response is the expansion of the TechSkills Accelerator under the National AI Impact Programme, which aims to upskill 40,000 tech professionals over three years and train 100,000 non-tech professionals in domain-specific AI skills by 2029, with accountancy and law already underway. Whether these targets translate into genuine capability uplift or credential accumulation will depend on how rigorously outcomes are measured — a question the report does not fully address.

On wages, the median monthly salary for resident tech workers reached S$8,000 in 2025, against an overall resident median of S$5,000. The premium is real and sustained. What the report does not interrogate — and what deserves scrutiny — is whether productivity gains from AI adoption are being distributed across the workforce or concentrated among those already positioned to capture them. The macro numbers are encouraging. The distributional question remains open.

Singapore’s digital economy is growing, and growing deliberately. The institutional architecture — IMDA’s mandates, the grant structures, the workforce programmes — reflects a state that manages transformation rather than merely enabling it. The AI adoption surge of 2025 is real. Whether it deepens into durable competitive advantage, or plateaus at the level of tool adoption without genuine process reinvention, is the question that the next iteration of this report will need to answer honestly.