Modern services including ICT and finance are important growth engines, with demand for tech services supported by digitalisation spending and the financial services sector benefiting from expected cuts in global interest rates.

The Modern Services Engine

Singapore’s economic outperformance in 2025—GDP estimated at 4.8% growth, up from 4.4% in 2024, and Q4 2025 accelerating to 5.7% year-on-year—was driven in large part by the modern services cluster, particularly information and communications technology (ICT) and finance & insurance. The Monetary Authority of Singapore (MAS), in its January 2026 Macroeconomic Review, identified modern services alongside the trade-related cluster as the twin underpinnings of growth, with the domestic economy’s output gap expected to narrow to around 0.7% of potential GDP in 2026 from 0.9% in 2025.

The numbers are large and growing. Singapore’s overall ICT market was valued at over US$66 billion in 2023 and is projected to reach more than US$141 billion by 2028, a compound annual growth rate (CAGR) exceeding 16%, according to GlobalData. This trajectory is supported by a digitally active population, early technology adoption, and a robust ICT infrastructure that has made Singapore a leading tech hub in Asia.

ICT Sector: Scaling on Digitalisation Spending

Enterprise ICT budgets are expanding rapidly. GlobalData’s 2024 survey of Singapore-based ICT decision makers found that more than 92% of respondents reported an increase in their enterprise ICT budget for 2024 compared to 2023—over 35 percentage points higher than the share who reported an increase in the prior year. This signals a structural shift in corporate spending priorities toward technological advancement rather than cyclical catch-up.

The digital economy’s share of Singapore’s GDP reached 18.6% in 2024, up from 18.0% in 2023 and 14.9% in 2019, according to the Infocomm Media Development Authority’s (IMDA) Singapore Digital Economy Report 2025. In nominal terms, the digital economy expanded by S$12 billion to S$128.1 billion. Crucially, more than two-thirds of this value came from non-Information & Communications sectors—Finance & Insurance, Wholesale Trade, and Manufacturing—demonstrating that digitalisation is now an economy-wide phenomenon rather than a tech-sector story.

The information and communications sector itself has been the fastest-growing sector by real value-added, driven by enterprise demand for digitalisation. Tech employment has risen from approximately 155,500 workers in 2017 to 201,100 in 2022, with tech professionals now accounting for 5.2% of total employment, up from 4.2% in 2017. Skill demand is shifting: between 2019 and 2024, Python and SQL became among the most sought-after tech skills, while cloud platform expertise and scalable digital infrastructure skills have gained prominence, even as web development skills have become relatively less central. AI-related job postings have increased steadily across all sectors, including I&C, Finance & Insurance, Manufacturing, and Professional Services.

% of GDP (%)Source: Orionmano Industries

Total tech spending in Singapore is forecast at S$25.5 billion (US$19 billion) for 2025, a 5.6% increase year-on-year, driven by AI adoption, cloud services, and cybersecurity investments, per the Government Technology Agency (GovTech). Singapore’s Smart Nation 2.0 vision—built on pillars of Trust, Growth, and Community—continues to shape national priorities, while a startup ecosystem valued at US$144 billion and more than 20 active unicorns, including Grab and Carro, provide a deep pool of innovation capacity.

Finance & Insurance: Tailwinds from Rate Cuts

The finance & insurance sector is the largest non-I&C contributor to Singapore’s digital economy and is poised to benefit directly from the expected easing of global monetary conditions. In the closing months of 2025, overall loans in Singapore increased by 5.7% year-on-year as of November, reflecting a nascent pickup in credit intermediation activity as central banks in major economies began cutting rates.

The MAS outlook notes that the finance & insurance sector “is likely to continue to be supported by broadly accommodative macroeconomic and financial conditions,” even as monetary easing cycles reach their final stages in most advanced economies. Lower interest rates typically compress net interest margins for banks in the near term but stimulate lending volumes, asset management inflows, and insurance product demand. Singapore’s position as Asia’s leading wealth management centre—with over S$5 trillion in assets under management—makes the sector disproportionately sensitive to global rate trajectories and capital flows.

AI adoption within finance is accelerating. IMDA data show that AI skills demand has risen steadily in Finance & Insurance since 2019, alongside I&C, Manufacturing, and Professional Services. The sector is deploying AI for fraud detection, automated compliance, robo-advisory, and personalised wealth products, embedding intelligence across its digital stack.

Outlook and Risks

The MAS projects the domestic output gap will narrow to 0.7% of potential GDP in 2026 from 0.9% in 2025, consistent with sustained but decelerating growth. Underlying growth drivers remain broadly similar: trade-related manufacturing (especially aerospace maintenance and multi-year capacity expansions) and modern services (ICT and finance) are expected to continue underpinning expansion. The domestic-oriented cluster, meanwhile, should benefit from a strong pipeline of public and private construction projects.

Upside risks include further acceleration in global AI-related demand and continued accommodative financial conditions. Downside risks remain anchored to global monetary tightening scenarios or a sharp slowdown in major trading partners. However, Singapore’s ICT market fundamentals—92% of enterprises increasing budgets, structural digitalisation, and a supportive policy environment—provide a buffer against external shocks.

For a small, open economy that has long depended on trade and manufacturing, the shift toward modern services as a primary growth engine represents a durable structural evolution. The convergence of enterprise digitalisation spending, AI adoption, and an easing rate cycle positions Singapore’s ICT and financial services sectors to remain the economy’s most dynamic contributors through 2026 and beyond.