Singapore urged to double down on AI and advanced manufacturing

Several segments are projected to generate $29t to $48t in annual revenue by 2040.

Singapore can lead the next wave of global growth if it doubles down on “bold bets” that made it a 7%-a-year growth story over the past six decades, according to McKinsey.

In a report, McKinsey framed the coming 20 years around “arenas of competition” such as AI, semiconductors, the digital economy, electrification, next-gen biopharma and physical-realm innovation.

These segments are projected to generate $29t to $48t in annual revenue by 2040, with APAC the largest market at $13t to $21t.

Historically, ASEAN captured less than 1% of activity in these arenas, but early signals in Singapore—from GlobalFoundries and Micron to Grab, Sea, TurtleTree and Equatorial Space Systems—suggest room to climb.

McKinsey laid out four imperatives. First, as trade fragments, Singapore should double down on being a connector; more than 30% of global trade could shift corridors by 2035, heightening the value of the city-state’s logistics and data links.

Second, it should adapt advanced manufacturing to become “AI-native,” embedding AI on production lines and coordinating real-time supply chains.

Demographics and automation make that shift urgent: the working-age share peaked at 79% in 2012 and is seen falling to 64% by 2050; generative AI could automate 30% of work hours by 2030; robotics may trim physical-labor demand by 11–16%. Robot density also lags Korea’s 1,012 per 10,000 workers, at 770 in Singapore.

Third, McKinsey said reskilling must become the universal enabler: the average “half-life” of skills is now  less than 5 years, and roughly 2.5 years in tech and AI—calling for continuous, AI-powered learning and national frameworks.

Finally, the firm urged mobilising private capital. Singapore drew about $5b in VC in 2024 (just under 1% of GDP); “wealthtech” could unlock 45% of personal assets now sitting in cash and deposits across APAC, whilst a $5.8t intergenerational transfer over the next five years could fuel targeted investment—if policy tilts toward angel, VC and PE risk capital.