According to the latest data released in the Singapore Digital Economy Report, the adoption of artificial intelligence (AI) among businesses has significantly increased, while the country’s digital economy expanded to over $144 billion. These findings indicate a growing reliance on technology, contributing a larger proportion of the nation’s gross domestic product (GDP).
Digital Economy and Sector Growth
The Infocomm Media Development Authority (IMDA) released the report on October 5, detailing the rapid progress of Singapore’s digital sector. The digital economy grew from $136.5 billion in 2024 to $144.1 billion in 2025. This growth boosted the sector’s contribution to the national GDP from 18.8% to 19.3% year on year.
The report calculates the digital economy based on two metrics: the value-add generated by the information and communications sector (including telecommunications, computing, and software) and the value-add derived by non-tech industries through the adoption of digital solutions. Notably, non-tech industries represented the largest segment of this growth, increasing 3.6% to $97 billion in 2025, while the tech sector expanded 6.1% to $47.1 billion over the same period.
AI Adoption and Employment Trends
AI usage among all Singapore enterprises rose sharply, moving from 14.7% in 2024 to 23.5% in 2025. This expansion was observed across all business sizes: for small- and medium-sized enterprises (SMEs), adoption climbed from 14.5% to 23.4%, and for larger businesses, it jumped from 62.5% to 70.4% during the same period.
The labor market also reflected this technological shift. Tech employment saw a 3.8% increase year on year, reaching 222,200 in 2025, up from 214,000 in 2024. The fastest-growing professional roles were concentrated in AI, data, and cybersecurity. Wages in the tech field remain high; in 2025, the median monthly salary for tech workers was $8,000, which is 60% higher than the overall median salary for all resident workers, which stood at $5,000.
Impact of AI on Productivity and Skills Gap
Businesses are primarily implementing AI to boost operational efficiency and improve resource utilization, with nearly 88% of surveyed firms citing improved productivity and processes as the biggest benefit. Furthermore, the proportion of companies not using AI but planning to adopt it within the next 12 months doubled, rising from 5.6% in 2023 to 12.1% in 2025.
For workers, AI is also proving beneficial, with nearly 86% using AI at work in 2026, up from 78% the previous year. Workers most frequently use AI for content creation (generating and editing written and visual content), followed by automating processes (cited by 64% of users) and engaging with people (54%).
Despite the high rate of AI usage, a significant skills gap remains. While 68% of workers reported feeling the need to upskill or reskill using AI, only 37% had undergone related training within the preceding 12 months. The IMDA stated that this highlights a need for better support, noting, “This suggests that clearer signposting and broader support for workers to take up suitable training could help more workers build relevant AI capabilities.”
In response, IMDA is expanding its National AI Impact Programme to enhance AI capabilities for 140,000 workers by 2029. This initiative will provide advanced AI skills to 40,000 tech professionals, focusing on areas like agentic AI, while training 100,000 non-tech professionals in domain-specific skills relevant to sectors such as law and accountancy.
Industry Insights and Expert Commentary
Industry leaders highlighted challenges in the adoption process. Ang Yuit, president of the Association of Small and Medium Enterprises, noted that AI usage remains inconsistent among SMEs, citing difficulties related to limited time, budget, and manpower for process automation.
Selena Ling, chief economist at OCBC, cautioned that the growth of the digital economy may not benefit all workers equally. She advised that the benefits are contingent upon whether workers are employed in core digital domains with talent shortages, or if they are in lagging industries that might stagnate due to structural skill mismatches or job displacement from automation.
IMDA previously noted that the digital economy report calculates value-add through two methods: the economic contribution of the information and communications sector, and the value-add generated by non-tech industries leveraging digital technologies.
