Tech Explained: Here’s a simplified explanation of the latest technology update around Tech Explained: Singapore: AI and Tech Sectors Power 2025 GDP Momentum in Simple Termsand what it means for users..
Singapore’s economy has outperformed expectations in 2025, prompting the Ministry of Trade and Industry (MTI) to upgrade its GDP growth forecast to around 4.0%. While multiple sectors contributed to this performance, technology, digital innovation and AI-related industries played a particularly significant role in driving growth across manufacturing, trade and services.
This demonstrates the government’s focus on fostering innovation, encouraging technology adoption and supporting startups that contribute to Singapore’s long-term digital competitiveness and global ambitions.
The electronics manufacturing cluster was a major contributor, expanding 6.1% year-on-year (YoY) in the third quarter of 2025. This growth was driven by strong global demand for AI-related semiconductors, servers and server components, with the infocomms and consumer electronics segment alone expanding by 67.6%.
This surge highlights Singapore’s strategic role in supporting the global AI supply chain and its competitive position in high-value electronics production. The cluster’s growth also reflects increased investment in R&D and smart manufacturing technologies, further solidifying Singapore’s leadership in the tech sector.
The biomedical manufacturing cluster also recorded robust growth of 8.9% YoY, supported by higher-than-expected production of a key high-value active pharmaceutical ingredient. While primarily focused on healthcare, this expansion demonstrates the increasing role of advanced manufacturing technologies and precision systems in delivering innovation-led production.
In the wholesale trade sector, growth of 3.9% YoY was largely driven by strong sales in electronic components, telecommunications and computer products. The sector benefited from robust global demand for AI-enabled electronics, which reinforced the link between Singapore’s trade performance and its technology capabilities. Machinery, equipment and supplies also saw high sales volumes, reflecting the broader digitalisation of industrial processes.
The information and communications (ICT) sector expanded 4.7% YoY, slightly faster than the previous quarter. Growth was led by IT and information services, including data hosting and internet search engine activities, as well as digital content and games publishing.
These developments highlight the increasing significance of digital solutions, data services and creative tech industries in Singapore’s economy. Strong enterprise adoption of cloud computing, AI analytics and cybersecurity solutions further supports the sector’s ongoing expansion.
The finance and insurance sector grew 4.6% YoY, supported by digital payment platforms and fintech services. The expansion of banking services, net fees and commissions, coupled with higher transaction volumes domestically and regionally, underscores the integration of technology into financial services and the rise of digital payments ecosystems.
Global trends also contributed to Singapore’s tech-driven growth. The ongoing AI boom supported US economic growth and strengthened demand for AI-related semiconductors, servers and components in the region.
Singapore’s manufacturing and trade sectors directly benefited from these trends, demonstrating the economy’s responsiveness to global technology adoption and innovation-driven demand.
In the professional services sector, growth of 3.4% YoY was supported by digital and tech consulting services to regional enterprises. As companies increasingly seek digital transformation solutions, Singapore-based firms have leveraged technology expertise to expand their influence across Southeast Asia.
Looking ahead to 2026, the electronics cluster and ICT sector are expected to maintain steady growth, supported by continued demand for AI-related semiconductors, servers and enterprise digital solutions.
Resilient enterprise demand for digital solutions and services is projected to underpin the performance of outward-oriented services sectors, while technology-enabled trade and manufacturing are likely to remain growth anchors.
Ongoing strategic investments in innovation hubs, research centres and tech partnerships are expected to further accelerate Singapore’s digital transformation and global technology leadership.
Overall, Singapore’s economic performance in 2025 demonstrates how technology, AI, ICT and digital innovation are not only key growth drivers within specific sectors but also catalysts for broader trade, manufacturing and services development. These sectors are increasingly central to Singapore’s strategy to remain competitive and resilient in a rapidly evolving global economy.