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Development Authority, 2025a). More importantly, the compound annual growth rate
(CAGR) of the digital economy from 2019 to 2024 reached 12%, significantly higher than
the overall nominal GDP growth rate (7.3%) during the same period.
Table 1. Scale and growth rate of Singapore’s digital economy
Indicator Value
Digital economy value added (2024) SGD 128.1 billion
Share of GDP (2019) 14.9%
Share of GDP (2023) 18.0%
Share of GDP (2024) 18.6%
Digital economy CAGR (2019 - 2024) 12%
Nominal GDP CAGR (2019 - 2024) 7.3%
Source: IMDA (2025a; 2025b)
The growth gap between the digital economy and nominal GDP reflects a qualitative
shift in the national growth structure. The digital economy is not merely increasing
according to technological cycles but is becoming a structural growth driver, contributing
to the enhancement of total factor productivity (TFP). According to endogenous growth
theory (Romer, 1990), when knowledge and technology are integrated into production
processes, they create long-term spillover effects on the productivity of the entire
economy. In the Singaporean context, AI and data are playing the role of endogenous
factors driving growth through automation, predictive analytics, and operational
optimization. Notably, the increase in the digital economy's share of GDP occurred
immediately after the implementation of NAIS 2.0 (Smart Nation Singapore, 2023). This
demonstrates a clear and direct link between national strategy and practical economic
efficiency, rather than just a spontaneous expansion of the technology sector.
One of the most important characteristics of Singapore's digital economic growth is
the structure of value-added contributions. According to IMDA (2025a), more than two-
thirds of the digital economy's value added comes from non-ICT sectors. This indicates
that the growth driver does not stem from the expansion of the pure technology industry
but from the profound digitization process in traditional sectors such as finance, trade,
logistics, and manufacturing.
Table 2. Structure of digital economy value added by sector
Component Share in Digital Economy VA
ICT Sector Approximately 1/3
Non-ICT Sectors More than 2/3
Source:: IMDA (2025a)
This structure reflects the nature of AI as a general-purpose technology capable of
restructuring various economic sectors. When AI is integrated into the operational core of
businesses - from supply chain management to financial risk analysis - the impact is not
limited to technological upgrades but transforms into improved production and service
efficiency. This has profound implications for structural economics. Singapore has moved
from the stage of “digitizing interfaces” to “digitizing core processes”. When technology is
integrated into the operational core, productivity effects are cumulative and difficult to
reverse, creating a long-term competitive advantage.
Digital economic growth cannot be sustainable if it only focuses on large technology
corporations. According to IMDA (2025b), the rate of SMEs using AI in 2024 reached
14.5%, a significant increase from 4.2% in 2023 (IMDA Press Release, 2025). This tripling
of AI adoption among SMEs in just one year reflects a significant increase in technology

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