Singapore Sees Surge in AI Adoption; Digital Economy Flourishes
Businesses in Singapore are embracing AI technology more than ever as the digital economy flourishes, now accounting for a larger GDP share.
SINGAPORE – The landscape of business in Singapore is transforming rapidly, significantly driven by the growing integration of artificial intelligence (AI) across various sectors. By 2025, projections indicate that more than 20% of enterprises will be leveraging AI technology as part of their operations, coinciding with a robust growth trajectory of the country's digital economy.
Significant Growth in AI Integration
The latest figures from the Singapore Digital Economy Report, released by the Infocomm Media Development Authority (IMDA) on October 5, reveal a notable increase in AI adoption among businesses. The percentage of all enterprises utilizing AI surged from 14.7% in 2024 to 23.5% in 2025. Small and medium-sized enterprises (SMEs) experienced a similar boost, rising from 14.5% to 23.4%, while larger companies saw adoption rates climb from 62.5% to 70.4%.
Digital Economy Continues to Expand
The digital economy's growth has been impressive, expanding from $136.5 billion in 2024 to over $144 billion in 2025. This growth is reflective of the digital economy's increased contribution to Singapore's GDP, which saw a rise from 18.8% to 19.3% over the same period.
IMDA underscores that the robust growth observed in the digital economy illustrates how essential digital technologies have become in influencing operational dynamics across various sectors. This results from two main components: the information and communications sector's direct contributions and the economic benefits derived from non-tech industries adopting digital solutions.
Employment in the Tech Sector Grows
The rise of the digital economy has also positively impacted employment in the tech sector, with job numbers reaching 222,200 in 2025 — a growth of 3.8% from the previous year. The most rapidly growing positions are those relating to AI, data analysis, and cybersecurity. Regarding compensation, tech workers enjoyed a median monthly salary of $8,000, 60% higher than the overall median wage of $5,000.
Businesses and Their Future with AI
The appetite for AI is evident, as businesses increasingly plan to implement AI solutions. The percentage of enterprises intending to integrate AI in the next 12 months doubled from 5.6% in 2023 to an impressive 12.1% in 2025. Among those already utilizing AI, 40% are transitioning from experimental use to broader application within their operations.
Companies using AI are experiencing the benefits firsthand, primarily through productivity enhancements and resource optimization. A staggering 88% of these firms reported improved productivity, while 44% noted reductions in costs and better resource allocation.
Gains and Challenges for Workers
On the employee side, AI's impact is palpable. According to IMDA, around 86% of workers are projected to use AI in their roles by 2026, rising from 78% in 2025. Many workers cited increased productivity as the greatest advantage of using AI, with 73% noting improvements in their job performance and 69% reporting enhanced work quality.
However, there are challenges in the realm of training and skills development. Although 68% of workers recognize the need to upskill in AI, only 37% have pursued relevant training in the past year. Common obstacles to training attendance include employer nomination issues and uncertainty about appropriate courses.
Strengthening AI Skills Across Industries
To address the skills gap, IMDA is expanding its National AI Impact Programme, aiming to upskill 40,000 tech professionals and equip 100,000 non-tech workers with domain-specific AI skills by 2029. Initial efforts of the program are already underway in sectors like law and accountancy.
Despite these advancements, SMEs face notable hurdles in AI adoption. Many lack the necessary resources, time, and expertise for effective implementation, as highlighted by Ang Yuit, president of the Association of Small and Medium Enterprises.
As pointed out by Selena Ling, chief economist at OCBC, the burgeoning digital economy may not equally benefit all workers. Ensuring that training and opportunities are accessible across different industries will be key in addressing structural skills mismatches and job displacements as AI continues to reshape the job landscape in Singapore.