According to the latest data presented in the Singapore Digital Economy Report, the adoption of artificial intelligence (AI) across Singapore’s businesses has significantly increased. Furthermore, the nation’s digital economy expanded to exceed $144 billion, representing a growing proportion of the country’s gross domestic product (GDP).
Economic Growth and Digitalization Trends
The report, published by the Infocomm Media Development Authority (IMDA) on October 5, provided comprehensive figures detailing the state of the local economy. The overall digital economy grew from $136.5 billion in 2024 to $144.1 billion in 2025. This expansion resulted in the digital sector contributing 19.3% to the national GDP, up from 18.8% in the previous year.
IMDA noted that this steady growth confirms that digital technologies are fundamentally reshaping operations across various industries and modifying how workers perform their jobs. The report defines the digital economy using two components: the monetary value added by the information and communications sector (including services like telecommunications, computing, and software), and the value generated by non-tech industries that have adopted digital solutions.
In 2025, non-tech industries were the largest contributor to Singapore’s digital economy, expanding by 3.6% to reach $97 billion. Conversely, the tech sector saw an expansion of 6.1%, totaling $47.1 billion over the same period.
AI Adoption Among Enterprises
AI implementation is rapidly increasing across all business sizes. The report revealed that overall AI adoption among all enterprises rose from 14.7% in 2024 to 23.5% in 2025. This increase was observed in both small- and medium-sized enterprises (SMEs), whose adoption rate climbed from 14.5% to 23.4%, and larger businesses, whose usage jumped from 62.5% to 70.4% during the same period.
Overall digitalization remains high, with 96.4% of all businesses having adopted at least one of six digital domains in 2025, a slight increase from 95.1% in 2024. These six areas include data analytics, cybersecurity, e-commerce, cloud technologies, e-payments, and AI.
The data also shows that while many businesses are currently using AI, the planning for adoption is accelerating; the proportion of companies that have not yet used AI but plan to do so within the next 12 months doubled from 5.6% in 2023 to 12.1% in 2025.
For businesses already employing AI, two out of five report moving beyond mere experimentation to implementing the technology across broader operational functions. According to IMDA, the primary benefits reported by firms were improvements in productivity and processes, cited by nearly 88% of respondents, followed by lower costs and optimized resources, mentioned by 44%. These responses were gathered from an IMDA survey of approximately 7,000 businesses of varying sizes and sectors.
Workforce and Talent Shift
The tech employment workforce grew by 3.8% year-on-year, reaching 222,200 people in 2025, up from 214,000 in 2024. The fastest-growing roles were concentrated in AI, data, and cybersecurity sectors. In terms of wages, the median monthly salary for tech workers in 2025 was $8,000, which was 60% higher than the overall median salary for all resident workers. (For comparison, the median salaries in 2024 were $7,950 for tech workers and $4,860 for all workers.)
IMDA highlighted that the demand for tech talent is increasingly being drawn from outside the technology industry, with non-tech sectors leading the growth in tech employment at 5.3%, compared to 1.8% growth in the tech sector itself.
Workers are also experiencing benefits from AI; nearly 86% reported using AI in their work in 2026, an increase from 78% the previous year. The leading benefits cited by AI users were improved productivity (73%), better work quality (69%), and enhanced problem-solving capabilities (68%).
Regarding usage, employees most frequently utilized AI for content creation, encompassing both written and visual materials, with almost 77% reporting this use. The next most common applications were automating processes (64%) and engaging with people (54%).
Addressing the Skills Gap
Despite the strong adoption rates, a significant training gap persists. While 68% of workers recognize the necessity of upskilling or reskilling in AI, only 37% reported receiving AI-related training within the past 12 months. Workers cited reasons for not attending training, including not being nominated by their employers (35%), lack of time, or uncertainty about which specific course was appropriate.
In response, IMDA is expanding its National AI Impact Programme to enhance AI capabilities among both tech and non-tech workers. For tech professionals, the program aims to upskill 40,000 individuals over the next three years, equipping them with advanced skills, including knowledge of agentic AI—bots capable of autonomous action.
For non-tech workers, the initiative plans to train 100,000 professionals by 2029 in AI skills tailored to specific professional domains, with rollouts already underway in fields such as law and accountancy.
Expert Commentary
Industry experts noted potential unevenness in the benefits of this growth. Ang Yuit, president of the Association of Small and Medium Enterprises, commented that AI implementation remains inconsistent among SMEs, noting that many struggle with securing the necessary budget, manpower, and time to automate work processes. He added that “there are not as many specialised talents with strengths and experience in implementing AI for enterprises, compared to more established work functions like social media marketing.”
Similarly, Selena Ling, chief economist at OCBC, cautioned that the growth of the digital economy might not distribute benefits equally among the workforce. She stated, “It depends on whether workers are in growing industries with core digital domains that have a talent shortage, or if workers are in industries that are lagging behind and which may stagnate without government intervention due to structural skills mismatch or job displacements arising from AI and tech automation.”
