SIA, Singtel, and more: Singapore’s top AI adopters could drive three per cent GDP growth, says Morgan Stanley

The Republic can sustain a three per cent gross domestic product (GDP) growth rate, thanks to innovation and productivity gains from artificial intelligence (AI) tools, according to research from Morgan Stanley.

That growth rate means Singapore would remain one of the fastest-growing developed economies globally.

The country, which had a population of 6.04 million as at June 2024, had most economists forecasting a growth rate of zero to two per cent after the second-quarter GDP was higher than expected. It previously had an official forecast downgraded to zero to two per cent for 2025 from a range of one to three per cent.

It had 4.4 per cent GDP growth in 2024 and 4.2 per cent year-on-year growth in the first half of 2025.

The city-state is one of the top AI markets globally relative to its size, aided by an AI-development friendly ecosystem built by the government. It is ranked in the top 10 across multiple indices, such as the Stanford Global AI Vibrancy Index.

Based on Morgan Stanley’s survey results, published on Thursday (17 July), over 70 per cent of companies have adopted AI. Top use cases found were labour savings, product development, and supply-chain efficiencies.

Singapore is home to more than 80 active AI research faculties, 150 AI research and development and product teams, and over 1,000 AI startups, said the report.

The country has attracted “strong” industry participation in generative AI (GenAI), especially in 2025.

Salesforce pledged a US$1 billion (S$1.29 billion) investment across the next five years in an AI push, with its flagship AI offering Agentforce able to help quickly expand Singapore’s labour force amid its ageing population and birth-rate struggles.

Meanwhile, Oracle launched an AI Centre of Excellence, aiming to provide training to upskill studentsand professionals in cloud-based and AI technologies and experimentation for organisations to testearly AI innovations.

Which companies are major enablers of AI, and which are adopting the technology? Here’s what Morgan Stanley says.
 

Enablers and adopters

Singtel was identified as a top AI enabler, through its infrastructure push. The telecommunications company has been expanding its data centre capacity in Singapore and the construction of NVIDIA’s accelerated AI factories in Southeast Asia. Morgan Stanley estimates an excess of 200 megawatts of operational capacity by 2026.

Asset manager and operator Keppel is set to be one of the key beneficiaries due to its experience in “integrated solutions providing power, connectivity, data centres, and decarbonisation for customers”.

Sembcorp Industries is also set to enjoy gains through its power and natural gas provision, and is “leveraging this opportunity to compound earnings” and top-quartile returns on equity. Morgan Stanley estimates higher energy prices, owing to high demand for European gas, will lead to higher profits for Sembcorp.

In terms of AI adopters, Grab was flagged as a significant driver of technological innovation in the ASEAN region, including Singapore. The company has over 1,000 AI models and launched a centre for AI excellence in May. It has also been a key enabler for autonomous vehicle adoption.

Morgan Stanley stated that Grab’s lead in AI adoption will “ultimately drive more efficient and profitable growth while strengthening its market leadership in the region”.

Sea, Singapore Airlines (SIA), and ST Engineering were also named as “significant drivers” of technological innovation, particularly in the AI space. Sea has adopted AI for consumer-facing and internal uses, boosting gross merchandise value by improving recommendation accuracy and improving purchase conversion rates. It was deemed a “top pick” in the Asian e-commerce sector.

Flag carrier SIA has been using GenAI for operational efficiency improvements. It implemented Jarvis, a GenAI tool to improve staff productivity, and a GenAI-powered training tool. In March, it announced a collaboration with Salesforce for AI-powered customer-facing applications, and to develop AI solutions for airlines at a Singapore research hub.

Finally, ST Engineering is adopting AI to drive growth and is expected to more than double its digital business revenue to S$1.3 billion by the end of 2029, from about S$600 million in 2024. It is developing AI infrastructure and projects for defence, commercial aerospace, and smart-city purposes.

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