In 2022, Singapore's digital economy accounted for more than 17 percent of the nation's gross domestic product, compared to the 13 percent reported in 2017. IMDA, Singapore's Infocomm Media Development Authority, noted in a report that digital technologies are becoming widely adopted by businesses, which has led to a growth in the tech labor force. IMDA also observed that the city-state's digitalization is expanding at a rate beyond its overall economic progress.
In 2022, Singapore's digital economy accounted for more than 17% of its gross domestic product (GDP), a significant increase from the 13% reported in 2017, according to the Infocomm Media Development Authority's (IMDA) study released on Friday. This translates to a total value of SG$106 billion ($77.5 billion), almost twice the amount of SG$58 billion in 2017.
The digital economy is composed of two parts: the information and communications sector and digitalization in the rest of the economy. Of this, the I&C sector played a third part in driving digitalization, providing services such as telecommunications, computer programming & IT consultancy, cloud computing and software development. The remaining two-thirds were driven by digital capital investments and spending across all sectors excluding those from the I&C sector, which contribute to generating value for businesses in terms of better customer reach, optimizing business processes and innovating products and services.
IMDA also credited the growth of the digital economy to the increasing adoption of digital technologies by enterprises, which in turn resulted in robust tech manpower growth. Among the countries included in the report, Singapore performed better than Estonia, Sweden and the United Kingdom with its digital economy contributing 16.7% to its GDP in 2020.
IMDA noted that the double-digit growth in the information and communication sector -- as high as 70% -- was propelled mainly by games, online services, and e-commerce, attributed to the greater acceptance of them during the COVID-19 pandemic. The digitalization value-add to the rest of the economy had soared from SG$38.6 billion in 2017 to SG$72.8 billion in 2022, led by sectors such as finance and insurance, wholesale trade, and manufacturing. The value-add from digitalization as a portion of the overall economy swelled from 8.7% to 11.9% during the same period, or an annual compound growth rate of 13.5%, faster than the growth of Singapore's GDP at 3.8% for the year of 2022. Compound Annual Growth Rate (CAGR) is a measure of investment returns which looks into the yield of an investment on an annual basis over a certain timeframe.
The implementation of digital technologies by more and more companies has been a driving force of digitalization in the remainder of the economy. IMDA's annual survey indicates that the technology adoption rate of organizations increased from 74% in 2018 to 94% in 2022. This has resulted in more tech professionals being hired across all areas, with the total number of tech positions rising from approximately 155,500 in 2017 to 201,100 in 2022. Commenting on the matter, IMDA mentioned, "Although the most recent tech sector cutbacks, the need for tech personnel is likely to remain strong as the economy continues to digitalize."
Generalizing, Singapore's digital economy has been developing sharply, with a bright future ahead. IMDA asserted that the Singapore government is still devoted to driving a competitive digital economy and expand a tech-adept labor force. Deputy Prime Minister Lawrence Wong included in his budget speech for 2022 that the government will invest SG$200 million in the upcoming years into initiatives that strengthen digital skills among employees and organizations.
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