Southeast Asia’s digital economy is set for immense expansion in 2030, with economic growth projected to reach up to USD1 trillion, which is twice as high as most countries’ GDP — as shown in Google’s latest e-Conomy SEA 2022 report.
Southeast Asia’s digital economy continues to thrive this year, and its gross merchandise value (GMV) is expected to hit USD200 billion, according to the report.
Over the past three years, 100 million new Southeast Asian internet users have come online — a number that is now beginning to slow down as technology becomes an integral part of people’s lives. As a result, many digital businesses are shifting their priorities from acquiring new customers to engaging more deeply with existing ones.
However, there is still significant room for the digital economy to grow, especially in suburban areas where the adoption of online services could be faster.
The e-Conomy SEA 2022 report also showed a significant increase in e-commerce sales with 16% year-over-year growth. Although people are returning to some traditional forms of shopping in person and businesses focus on profitability by cutting back on discounts, online sales continue growing.
Food delivery, which increased threefold during the pandemic, has now returned to its previous level and is expected to grow at 14%.
Transport is looking toward a robust recovery — it grew by 43% over the last year. However, this growth has been hampered by rising fuel prices and labor shortages.
Travel is expected to grow by 115% in the coming year, boosted by international business and travel. However, full recovery for the transport and travel sectors will take some time before regaining their 2019 levels.
Across Southeast Asia, the DFS sector continued to become a top-funded industry and overtook e-commerce as the region’s number one investment sector. Established financial services companies are racing to capture different consumer segments and strengthen their regional position as pureplay fintechs, and consumer tech platforms accelerate digitalization.
Tech funding also remained strong during the first half of 2022 — with a 13% increase in deal value compared to H1 2021. Emerging sectors, including healthtech (or medical apps), SaaS, and Web3, may become critical areas for investment in the digital decade, with over 80% of venture capitalists expecting this shift.
Investors in early-stage companies are flourishing, but late-stagers face dim IPO prospects. As a result, investors have adopted a more cautious wait-and-watch approach going into the second half of 2022.
Image credit: iStockphoto/oatawa
Read More: SEA Digital Economy Is Alive and Well