Southeast Asia’s digital economy is set to expand by 17% year-on-year, reaching $368b in gross merchandise value (GMV) by 2026, according to the latest e-Conomy SEA report by Google, Temasek, and Bain & Company. The report, released today, predicts the region’s digital economy will surpass $1t by 2035, with artificial intelligence (AI) playing a pivotal role in this growth.
The report, titled “Building the Intelligent Economy,” highlights that Generative AI has been adopted by 243 million people, representing 58% of the region’s workforce, in less than three years. This rapid adoption is four times faster than that of mobile internet. However, the report notes that whilst AI adoption is widespread, deeper usage and economic value are yet to be fully realised.
Key sectors such as e-commerce, online travel, and digital financial services are experiencing significant growth due to AI integration. E-commerce remains a primary growth engine, with a projected GMV of $226 billion, growing 18% year-on-year. Online travel and digital financial services are also seeing substantial increases, with AI enhancing consumer interactions and operational efficiencies.
Consumer trust in AI is on the rise, with 62% of users expressing greater confidence in AI tools compared to last year. This growing trust is expected to drive further monetisation opportunities, although it remains contingent on responsible AI deployment and robust privacy protections.
The report also highlights the stabilisation of private capital funding for the digital economy at $8b annually, with AI-related investments capturing a significant share. The region’s AI infrastructure and applications sector saw a $20b deal value over the past year, underscoring the capital’s breadth required for AI ecosystem growth.
As Southeast Asia enters what the report calls an “AI decade,” the focus will be on scaling AI adoption through enhanced infrastructure, efficiency, and supportive policies. The upcoming ASEAN Digital Economy Framework Agreement is expected to further unlock growth potential in the region’s digital economy.
