SEA digital economy to grow in 2022 despite headwinds: report

Southeast Asia’s digital economy is poised to hit US$200 billion in gross merchandise value (GMV) in 2022 – three years earlier than predicted.

In 2030, this figure could skyrocket to up to US$1 trillion, according to a joint report by Google, Temasek, and Bain and Company.

ASEAN flags / Photo credit: aseanbriefing.com

Over the past three years, 100 million users have come online in Southeast Asia, with the region housing over 460 million internet users. However, the report stated that after years of acceleration and growth, digital players are more concerned about deepening engagement with current consumers rather than acquiring new ones.

Though verticals like transport and food, online travel, online media, and digital financial services continued to be popular this year, ecommerce is still the biggest driver for growth in the region. The segment has witnessed a 17% compound annual growth rate (CAGR) from last year, pushing GMV to US$131 billion.

Source: Bain and Company

Digital financial services and all its sub-sectors – including digital payments, investments, and insurance – have seen considerable growth due to a shift from offline to online behavior spurred on by the pandemic. Investment tools are set to see the biggest growth within the next three years, predicted to grow at a CAGR of 34% to breach US$92 billion in assets under management.

Source: Bain and Company

Environmental, social, and governance (ESG) awareness has also come to the fore, though the nascent topic is still largely unexplored in the region. The sector encompasses areas like emissions and resources, labor practices, as well as digital equality and inclusion.

Investment slowdown?

Though there was strong momentum in Southeast Asian investments in the first half of this year, caution has led investors to prefer funding early-stage startups, which are still flourishing despite macroeconomic headwinds, the report stated.

Source: Preqin