AI could help Singapore sustain 3% annual GDP growth despite ageing population: Morgan Stanley

SINGAPORE: Artificial intelligence (AI) could help Singapore maintain annual GDP growth of 3% over the long term, even as it faces the structural challenge of a shrinking workforce, according to a new report by Morgan Stanley Research.

Released this month, the report points to AI as a pivotal force for sustaining national productivity and ensuring Singapore remains one of the fastest-growing developed economies.

“Singapore’s deliberate and coordinated approach to AI is beginning to bear fruit,” the report said, noting that more than 70% of companies covered in the study have already implemented AI technologies in some form.

AI adoption is strongest in four main areas: internal productivity tools, customer-facing services, supply chain optimisation, and product development. These technologies, the report suggests, are helping firms automate repetitive tasks, improve customer experience, and make better, data-driven decisions.

The report categorises companies into two broad groups. First are the “AI Enablers” or firms like Singtel, Keppel, and Sembcorp Industries which are building the infrastructure necessary for widespread AI deployment, such as next-generation data centres, energy systems, and high-speed connectivity networks.

The other group are the “AI Adopters” such as Grab, Sea Group, Singapore Airlines, and ST Engineering, which are applying AI to sharpen operations and drive innovation.

While most companies surveyed remain cautious about attaching hard numbers to the financial returns of AI investment, some reported early signs of growth in earnings and capital expenditure.

Despite this, the report flagged several risks on the horizon such as cybersecurity, AI misuse, and workforce disruption. “The need to retrain and upskill workers will be essential,” the report read, highlighting government programmes like SkillsFuture that aim to bridge emerging skill gaps.

Morgan Stanley also described Singapore’s approach as a potential model for other small, advanced economies navigating similar demographic and technological shifts.

“Singapore shows how strategic planning and cross-sector commitment can enable a country to integrate emerging technologies and turn structural challenges into growth opportunities,” the report noted.