Digital economy holds firm as growth turns execution-led

Growth is becoming more capital-intensive and scale-driven.

Singapore’s digital and technology-enabled economy is expected to remain structurally supported in the near term, though growth is becoming more dependent on execution and capital deployment rather than breakthrough innovation, SGX said.

Data from the Ministry of Trade and Industry (MTI) show that manufacturing and modern services continue to be anchored by electronics, semiconductors, and precision engineering, underscoring Singapore’s role in regional technology supply chains.

The International Monetary Fund (IMF) has likewise identified sustained technology-related investment as a key driver for economies integrated into global value chains, despite rising geopolitical risks and cost pressures.

“In this environment, growth in the digital economy is increasingly shaped by deployment, integration, and utilisation rather than frontier innovation alone,” the report said.

The country's digital economy reached $128.1b in 2024, accounting for 18.6% of GDP, up from 18.0% in 2023, according to the Infocomm Media Development Authority.

It now contributes more than $1 in every $6 of the economy.

From 2019 to 2024, it grew at a 12.0% CAGR, outpacing nominal GDP growth of 7.3%.

About two-thirds of the digital economy comes from digitalisation in non-ICT sectors—mainly finance and insurance, wholesale trade, and manufacturing—whilst the remaining one-third comes from the ICT sector. 

SGX said economic activity is concentrating in segments such as data centre infrastructure, automation, AI-enabled manufacturing, digital services, and enterprise platforms. These areas emphasize scale, reliability, and cross-border connectivity.

“The implication is not slower digital growth, but a shift towards more capital‑intensive, execution‑led expansion that favours economies able to combine technology, financing, and operational coordination,” SGX noted.

The iEdge Singapore Next 50 Liquidity Weighted Index posted a 9.7% total return in 2026 year-to-date as of the April 16 morning session, slightly outperforming the Straits Times Index (STI), which returned 8.9% over the same period.

The difference is partly attributed to index composition. Technology-linked firms feature prominently, with UMS Integration and iFAST Corporation holding weights of 5.6% and 5.0%, respectively. Frencken Group ranks as the sixth-largest constituent at 4.6%, contributing to a combined 19% weight from four technology stocks.

These companies have delivered an average total return of 43% since 2025, alongside a 2.5-fold increase in average daily turnover compared with last year. Technology has consequently emerged as the second-largest sector exposure within the index, behind real estate investment trusts (REITs).

Adjacent digital infrastructure players—including NetLink NBN Trust, NTT DC REIT, Digital Core REIT, and StarHub—account for an additional 6% of index weight.

Unlike traditional indices weighted by market capitalisation, the liquidity-weighted version of the iEdge Singapore Next 50 Index assigns weights based on six-month median traded value, subject to a 5% cap.

This gives more weight to actively traded stocks and less to large but less liquid names.

UMS Integration, for example, carries a 5.6% weight in the liquidity-weighted index versus 2.4% in the standard version, reflecting strong investor participation. Frencken Group shows a similar pattern.

Overall, index turnover is up 43% year-on-year to $275m daily, whilst valuations have risen from 1.05x to 1.23x price-to-book.

Whilst REITs continue to anchor the index with stable cash flows and balance sheet strength, technology and digital infrastructure exposures are increasingly shaping liquidity growth and investor focus.