Singapore's digital economy surges to 18.6% of GDP as AI adoption triples among SMEs

The city-state's digital economy expanded by S$12 billion in 2024, driven by widespread digitalization across industries and a dramatic surge in AI adoption, with three in four workers now regularly using AI tools.

Singapore's digital economy has reached S$128.1 billion, accounting for 18.6% of the nation's GDP in 2024, according to the Singapore Digital Economy report2025 released by the Infocomm Media Development Authority (IMDA) on October 6. This represents significant growth from 18.0% in 2023 and 14.9% in 2019, underscoring the critical role of digitalization in driving national economic growth.

The expansion reflects more than just the growth of technology companies. Over two-thirds of Singapore's digital economy comes from non-Information and Communications sectors, with Finance and Insurance leading as the largest contributor, followed by Wholesale Trade and Manufacturing. This cross-sector penetration demonstrates that digitalization has become essential across all industries.

SMEs lead digital transformation charge

Small and medium enterprises are increasingly embracing digital technologies, with 95.1% of SMEs adopting at least one digital area in 2024. More significantly, SMEs' digital adoption intensity reached an average of 2.3 digital areas, up from 2.0 in 2023, marking the largest jump in years.

The adoption of sector-specific digital solutions has also seen remarkable growth. Almost all SMEs—97%—adopted at least one sector-specific solution recommended in IMDA's Industry Digital Plans, compared to just 85% the previous year.

AI adoption shows explosive growth

Perhaps the most striking finding is the explosive growth in AI adoption. Among SMEs, AI adoption tripled in just one year, jumping from 4.2% in 2023 to 14.5% in 2024. Non-SMEs saw their AI adoption rate surge from 44% to 62.5% over the same period.

The financial benefits are substantial. SMEs utilizing AI-enabled solutions under the Productivity Solutions Grant achieved average cost savings of 52% in 2024, while those adopting AI-powered cybersecurity solutions realized even higher savings of 71%.

An IMDA-commissioned pulse survey revealed that AI-adopting SMEs are using AI across an average of three business functions, while non-SMEs deploy AI across five functions. The most common applications span IT, Customer Service, and Finance and Accounting.

Workers embrace AI tools

The workplace adoption of AI has been equally dramatic. Nearly three in four workers (73.8%) reported using AI tools at work, with 85% of these users reporting improvements in productivity, time savings, and work quality. Among AI users, 58% deploy the technology for brainstorming and ideation, 54% for writing and editing, and 42% for administrative tasks.

Employers are actively supporting this transition, with seven in ten AI users reporting that their employers provide support through training opportunities (62%), access to paid AI tools (42%), and clear usage guidelines (30%).

Tech workforce expands with rising wages

Singapore's tech workforce grew to 214,000 in 2024, up from 208,300 in 2023, with AI and data, and cybersecurity roles among the fastest-growing positions. This expansion was primarily driven by non-ICT sectors, further evidencing the deepening digitalisation across the economy.

Tech workers continue to command premium wages, with the median monthly wage for resident tech workers at S$7,950—significantly higher than the overall resident median of S$4,860. The demand for tech skills has evolved, with Python and SQL remaining highly sought-after, while demand for cloud platforms and scalable digital infrastructure skills has increased.

"We are encouraged by the strong growth momentum of our Digital Economy," said Kiren Kumar, Deputy Chief Executive of IMDA. "We will broaden and deepen our support for sectors, enterprises and talent to harness digitalisation and AI for innovation and productivity."

IMDA is also laying foundations for emerging technologies including Embodied AI, Agentic AI, Quantum Computing and Communications, positioning Singapore to remain competitive in the evolving digital landscape.