AI emerges as cornerstone of Singapore’s new economic playbook

SINGAPORE – Artificial intelligence (AI) is now

central to Singapore’s economic strategy

as the country seeks to navigate fractured global trade and accelerating technological disruption.

Budget 2026, themed “Securing Our Future Together in a Changed World” and delivered by Prime Minister Lawrence Wong on Feb 12, sets out plans to

anchor Singapore as a regional AI hub.

The aim is not only to create a new engine of growth, but also to strengthen the economy’s ability to compete globally while sustaining profitability, long-term expansion and high living standards.

Experts believe AI’s transformational force will lift economic growth to the upper end of the 2 per cent to 3 per cent annual average that Singapore has historically achieved. In addition, the Government’s guiding hand – via a

National AI Council

– will ensure that risks associated with AI’s productivity gains, such as lower labour input, are managed.

Ms Selena Ling, chief economist and head of OCBC Group Research, noted that the “heavy emphasis” on AI is a standout feature of Budget 2026.

“This is not your run-of-the-mill or modest upgrade of existing tech support schedules, but an all-out coordinated and multifaceted push to make AI central to Singapore’s economic and workforce strategy for the coming years, if not decades,” she said.

Singapore’s big AI adoption push comes at an interesting time.

US stock markets have posted consecutive weekly declines amid concerns that a wave of newly launched AI tools could disrupt traditional business models in sectors such as trucking, real estate, wealth management, software and advertising.

Meanwhile, sceptics continue to question the wisdom of tech firms’ massive investments in AI infrastructure, as the promised productivity gains remain elusive.

But there is a growing cohort of experts that point to fresh statistics as cause for optimism.

In a recent study, Stanford University professors Erik Brynjolfsson, Bharat Chandar and Ruyu Chen found that US productivity increased in 2025 by almost twice as much as the average of the previous decade as entry-level hiring cooled within AI-exposed sectors. On the other hand, firms that used AI to augment skills increased employment.

This provided evidence that AI-related productivity gains are tangible and that the technology can be deployed without dampening hiring.

Against this backdrop, the measures announced in Budget 2026 – from a National AI Council chaired by PM Wong to sector-specific AI missions and a Champions of AI programme – are designed to work together to

help firms navigate the risks and practical challenges of adopting AI.

“These initiatives will help unlock productivity gains by enabling new revenue streams while reducing costs through efficiency improvements,” said Mr Jester Koh, associate economist at UOB Group.

He said Budget 2026 aims to help businesses and workers capture AI’s gains by cutting adoption costs, boosting industrywide upskilling and scaling sector-specific applications.

The expansion of the TechSkills Accelerator to help workers build practical AI capabilities, together with the provision of six months’ complimentary access to premium AI tools for participants of selected SkillsFuture AI courses, will help strengthen AI literacy and fluency across the workforce.

More support will be rolled out for self-directed learning. The SkillsFuture website will be redesigned to make AI learning pathways clearer and more user-friendly.

The AI initiatives will strengthen the overall enterprise ecosystem in conjunction with initiatives such as the $1 billion enhanced Startup SG Equity scheme, under which the Government provides seed capital to crowd in private funding for promising start-ups.

“Harnessing AI effectively across the economy will boost productivity – a crucial driver of competitiveness and growth over the next decade – as Singapore’s mature economy faces increasingly binding land and labour constraints,” said Mr Chua Han Teng, senior economist at DBS Bank.