Southeast Asia's Digital Economy Surges Towards $263 Billion GMV in 2024, Driven by AI and E-commerce
In a recent report by Google, Temasek, and Bain & Company, forecasts indicate that Southeast Asia's digital economy is set to experience a considerable growth, targeting a Gross Merchandise Value (GMV) of $263 billion in 2024, marking a 15% increase from the previous year. This growth trajectory also sees revenue expanding by 14% to $89 billion, as the region moves towards sustainable and profitable development.
A significant contributor to this growth is the burgeoning investment in artificial intelligence (AI). The first half of 2024 alone saw Southeast Asia attracting AI infrastructure investments exceeding $30 billion, a testament to the region's rising interest in AI technologies. This is complemented by an elevenfold increase in AI-related searches over the past four years, driven by a young, digitally adept population with wide smartphone access.
Within the e-commerce sector, GMV is projected to reach $159 billion in 2024, an increase reinforced by existing customers who contribute to 70% of this growth—a shift from previous years which saw new consumer registrations as the driving factor. Established local entities are reinvesting to strengthen GMV and maintain their market share amidst growing competition from international firms. E-commerce revenue is anticipated to rise by 13% year-on-year, reaching $35 billion in 2024.
A notable trend within e-commerce is the rapid expansion of video commerce, which now represents 20% of e-commerce GMV, a sharp increase from less than 5% in 2022. This growth is propelled by live shopping events and influencer marketing, which are enhancing the online shopping experience and further engaging customers.
Food delivery services continue to thrive, with revenue expected to see a 54% year-on-year increase to $1.7 billion in 2024, while GMV will grow by 7% to reach $19 billion. Platforms are boosting profitability through new revenue channels such as in-app advertisements and subscriptions, in addition to enhancing restaurant visibility through AI-driven operational optimisation.
The transport sector has rebounded significantly, surpassing pre-pandemic levels. Revenue in this area is estimated to grow by 36% year-on-year to $1.5 billion, with GMV climbing 18% to $9 billion. This is attributed to strong demand, calculated pricing strategies, and expansion into rural locales by established firms, along with aggressive promotional tactics by emerging players.
Online travel continues to outpace growth within the broader digital economy, propelled by robust intra-regional travel within Asia-Pacific. Higher airfares and a preference for upscale travel experiences are poised to elevate Gross Travel Bookings (GTB) to $46 billion in 2024, marking a 21% year-on-year increase. Correspondingly, revenue in this sector is projected to grow by 18% to $20 billion. Although direct booking remains prevalent, online travel agencies are capitalising on core services and ancillary offerings such as financing and insurance.
The online media sector is projected to experience considerable growth as well, with GMV reaching $30 billion, reflecting an 11% year-on-year increase. Key contributors include video-on-demand services and gaming, with local developers gaining acclaim in casual gaming and hyperlocal content. Revenue streams in this sector are diverse, with in-app purchases, advertisements, and subscriptions attracting varied user segments.
Digital Financial Services (DFS) display impressive growth, with revenue anticipated to increase by 22% to $33 billion in 2024 from $22 billion in 2022. Digital payments and lending, which comprise over 90% of DFS revenue, are primary growth engines as e-wallet collaborations with major payment networks expand and QR code payment systems gain traction.
In Singapore, the digital economy is poised for noteworthy expansion, predicted to reach a GMV of $29 billion by 2024, a 13% rise from 2023. This growth is heavily supported by a resurgence in e-commerce, climbing from $8 billion in 2023 to $9 billion in 2024, alongside double-digit growth in online media and travel sectors.
Globally, Singapore ranks among the top 10 countries in terms of AI interest, with fields such as education, marketing, and travel prevalent in search trends. Demand remains robust for AI-powered mobile applications, including content creation and photo editing tools, and virtual assistants. Therefore, Singapore has managed to attract $9 billion in AI infrastructure investment in early 2024, ranking second only to Malaysia’s $15 billion.
These advancements showcase Southeast Asia's burgeoning digital economy as it positions itself at the forefront of innovation and growth in the global marketplace.
Source: Noah Wire Services