Singapore’s digital economy nearly doubled in 5 years

SINGAPORE — Singapore’s digital economy contributed to greater than 17% of its gross domestic product in 2022 — higher than the 13% logged in 2017, in accordance with a report by the country’s Infocomm Media Development Authority.

The study, published Friday, revealed that the economic contribution of the digital economy to Singapore’s GDP nearly doubled to 106 billion Singapore dollars ($77.5 billion) in 2022, up from SG$58 billion in 2017, in accordance with CNBC’s calculations.

The digital economy is split into two parts: the data and communications sector; and digitalization in the remainder of the economy.

One-third of the digital economy was driven by the data and communications sector and two-thirds by digitalization in the remainder of the economy.

The I&C sector drove digitalization providing services similar to telecommunications, computer programming & IT consultancy, cloud computing and software development.

Digitalization in the remainder of the economy measures the worth generated from investments and spending in digital capital across all sectors excluding those from the I&C sector. They include economic outcomes consequently of firms investing in digital technologies that construct value similar to reach customers higher, optimize business processes in addition to innovate services and products.

“The expansion of the digital economy has come on the back of accelerating adoption of digital technologies by enterprises, which in turn contributed to the robust growth of tech manpower,” IMDA said within the report.

Based on the most recent 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 higher, contributing to 16.7% of its GDP in 2020.

The important thing sub-sectors driving double-digit growth in the data and communications sector — at a rate of as high as 70% — were games, online services, and e-commerce, in accordance with IMDA. They were driven by increased adoption through the Covid-19 pandemic.

The worth-add from digitalization in the remainder of the economy increased from SG$38.6 billion in 2017 to SG$72.8 billion in 2022, driven mainly by sectors in finance and insurance, wholesale trade, and manufacturing.

Consequently, the value-add from digitalization as a share of the economy rose steadily from 8.7% in 2017 to 11.9% in 2022, the report said.

That is corresponding to an annual compound growth rate of 13.5%, which is quicker than the three.8% growth of Singapore’s GDP in 2022. CAGR is a measure of investment returns, which takes into consideration what an investment yields at an annual rate over a specified period.

The technology adoption rate of companies grew from 74% in 2018 to 94% in 2022, in accordance with IMDA’s annual survey.

Consequently, more tech professionals were deployed across all sectors, with the variety of tech jobs growing from about 155,500 in 2017 to 201,100 in 2022.

“Despite the recent tech sector lay-offs, the demand for tech jobs is more likely to remain resilient, because the digitalization of the economy deepens,” said IMDA.

“Overall, Singapore’s digital economy has been growing strongly and its longer-term outlook stays positive. The Singapore government continues to be committed to growing a competitive digital economy and fostering a technology-skilled workforce,” said IMDA.

Deputy Prime Minister Lawrence Wong said in his budget proposal for 2022 that the federal government will invest SG$200 million over the following few years into projects that construct digital capabilities in businesses and staff.