Singapore nearly doubles size of digital economy in five years

The digital economy of Singapore almost doubled its contribution to the gross domestic product (GDP) over the last five years, reaching S$106 billion (US$77.7 billion) in 2022, which accounts for more than 17% of the city's GDP. This robust growth also created more than 200,000 tech jobs in the past year, according to a new report published Friday by the Infocomm Media Development Authority (IMDA).

The report, developed in partnership with the Lee Kuan Yew School of Public Policy, is the government's first attempt at defining and measuring the scope of the city's digital economy with an eye on monitoring its direction and pace of change over time.

Singapore's digital economy is divided into two parts: the information and communications sector; and digitalization in the rest of the economy. One-third of the digital economy is driven by the information and communication sector, while two-thirds by the digitalization across the rest of the economy.

The report said that the information and communication sector is a key driver of digitalization, supplying digital services such as telecommunication, computer programming and IT consultancy, cloud computing, software developments, as well as production and distribution of content and media. It is the fastest growing sector in the past five years, accounting for S$33 billion ($24.2 billion) and 5.4% of the overall GDP in 2022, up from S$19 billion ($13.9 billion) and 4.3% of GDP in 2017.

During this time, games, online services and e-commerce saw double-digit growth of up to 70% CAGR, driven by the accelerated digitalization and technology trends such as the shift to clouds – especially during the COVID-19 pandemic.

Digitalization across the rest of the economy

Meanwhile, the digitalization across the rest of Singapore's economy progressed at a robust rate, outpacing the growth of the overall economy. Specifically, it contributed S$73 billion ($53.5 billion) or 11.9% of Singapore's GDP in 2022 – up from S$39 billion ($28.6 billion) or 8.7% of GDP in 2017.

"We measure the value generated from investments and spendings in digital capital across all sectors outside of the I&C sector. Firms invest in digital technologies to better reach customers, optimize business processes as well as for product and service innovation, which may in turn lead to better economic outcomes," the report said.

"The expansion of the digital economy has come on the back of increasing adoption of digital technologies by enterprises, which in turn contributed to the robust growth of tech manpower," it added.

The number of tech professionals has increased from around 155,500 in 2017 to 201,100 in 2022, driven by demand across all the sectors. The share of tech professionals as a percentage of total employment reached 5.2% in 2022, up from 4.2% in 2017.

The demand for tech manpower has benefited local workers, with locals accounting for more than 70% of tech jobs in Singapore. These jobs command a good wage, significantly higher than the overall residents' median wage. The median wage of local tech professionals has also enjoyed steady growth over the years.

Based on the latest available data, the digital economies of Estonia, Sweden and the UK accounted for 16.6%, 15% and 16.1% of their respective GDPs in 2020. Comparatively, Singapore’s digital economy performed better, contributing to 16.7% of its GDP in 2020.

"Overall, Singapore's digital economy has been growing strongly and its longer-term outlook remains positive. The Singapore government continues to be committed to growing a competitive digital economy," the report said.