Digital economy contributed almost 18% to Singapore’s GDP in 2023, surpassing finance and insurance sector

SINGAPORE: Singapore’s digital economy contributed 17.7 per cent to the country’s gross domestic product (GDP) last year, overtaking the finance and insurance sector, according to new data released by the Infocomm Media Development Authority (IMDA) on Tuesday (Oct 29).
This means it is now “comparable” with the manufacturing sector, Singapore’s largest industry, said the authority in its annual report.
IMDA said that the digital economy contributed S$113 billion (US$85.3 billion) of the country’s GDP in 2023, an increase from S$106 billion in 2022. 
The country’s digital economy now roughly accounts for S$1 (US$0.76) of every S$6 in the economy, IMDA said in a press release.
The digital economy grew at a compound annual growth rate (CAGR) of 11.2 per cent from 2018 to 2023, outpacing the nominal GDP growth rate of 5.8 per cent. 
Singapore’s finance and insurance sector accounted for 13.5 per cent of the CAGR from 2017 to 2022, while the manufacturing industry contributed around 12 per cent, data from IMDA showed.
The information and communications sector made up about one-third of the digital economy, with the remaining two-thirds coming from digitalisation across other sectors. 
The sector supplies digital services like telecommunications, computer programming and IT consultancy, cloud computing, software development, and production and distribution of content and media.
Responding to queries from the media, IMDA said that there is no target of how much the digital economy should contribute to the country’s GDP, but it expects the digital economy to continue playing a key role. 
“The tentacles of tech have spread to the non-tech sectors as well,” an IMDA spokesperson said. 
The number of tech jobs grew to 208,300 in 2023, representing a steady 3.4 per cent year-on-year growth, said IMDA, adding that demand for tech talent remains strong in spite of a more cautious hiring outlook in the tech sector globally.
In fact, 57.5 per cent of total tech employees in 2023 came from non-tech industries, such as roles in financial and insurance, professional services, wholesale trade and manufacturing sectors. 
Tech jobs “offer competitive salaries and career opportunities, with resident tech professionals earning a median monthly salary of 1.5 times the overall resident workforce median monthly salary”, IMDA said. 
“This strong demand for tech professionals continues to benefit locals, with more than 70 per cent of tech jobs held by Singaporeans and permanent residents,” the authority said in its digital economy report.
However, the monthly median wage for resident tech professionals fell to S$7,000 last year from S$7,376 in 2022. 
IMDA said that although the reason for the salary dip is not definitive, a softer tech market outlook could be a contributing factor.
Earlier this month, consumer electronics giant Dyson conducted a round of layoffs in Singapore about three months after it said employees in the country would not be directly impacted by a global restructuring that slashed about 1,000 jobs in Britain. 
Around the same time, Samsung Electronics laid off an undisclosed number of employees in Singapore, as it cut thousands of jobs around the world. 
E-commerce businesses were not spared either. 
In January, Lazada workers who spoke to CNA said nearly 100 of their colleagues were retrenched.
“There will always be global economic uncertainties driven by many macro trends that sometimes are out of our control but technology as a structural driver will remain the case for the long run,” said IMDA’s chief executive Lew Chuen Hong.
“While we have seen some headlines, we will continue to see significant growth as far as digital and the digital economy is concerned.”
IMDA said that Singapore’s tech sector is in a “healthy space” and is “cautiously optimistic” that the digital economy has “pervasive needs” across the economy. It added that many who were laid off from their tech jobs found new ones within two months.
The media authority said it will continue to drive programmes to help Singaporeans be equipped with the in-demand skills needed to have a competitive edge.
Small- and medium-size enterprises in Singapore have not just increased their digital adoption, but are also enhancing the way they use tech in their businesses. 
Data from IMDA showed that almost 95 per cent of SMEs have gone digital in at least one aspect of these areas: Cybersecurity, cloud, e-payment, e-commerce, data analytics and artificial intelligence. 
More than 80 per cent have used at least one digital solution to improve general business functions such as accounting, document management and digital marketing, a rise from 69 per cent in 2021. 
When it came to adopting digital solutions that supported specific sector needs, 85 per cent of SMEs adopted at least one sector-specific digital solution in 2023, an uptick from 61 per cent in 2021.