Report On Southeast Asia’s Digital Economy in 2022 by Google, Temasek, and Bain
In Singapore, According to recent research by Google, Temasek, and Bain & Company, South East Asia’s top digital economies developed faster than anticipated in 2022 and are on track to hit $200 billion in total transaction value this year.
The achievement represents a 20% rise over the $161 billion in gross merchandise value from the previous year and comes three years ahead of earlier estimates (GMV). In a previous analysis from 2016, it was predicted that by 2025, the six largest countries in the region’s internet economy will have a GMV of around $200 billion.
Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam are the six major economies included in the report. The populations of Brunei, Cambodia, Laos, Myanmar, East Timor, and Papua New Guinea were not covered in the report.
The report released on Thursday stated that “digital adoption growth is normalizing after years of acceleration.”
With 20 million additional users joining the region’s 460 million overall users in 2022, Southeast Asia’s internet user base will continue to increase.
That growth, meanwhile, has slowed and was only 4% in 2022 as compared to the previous year. At the height of the coronavirus epidemic, that contrasts with increases of 10% per year in 2021 and 11% in 2020.
Growth Catalysts
Despite the return of offline shopping with the lifting of pandemic lockdowns, e-commerce remains the region’s main driver of growth. The industry’s GMV increased by 16% to $131 billion in 2022.
However, the analysis predicted that growth in the e-commerce sector will slow down over the following three years, growing at a 17% CAGR from 2022 to 2025.
The report stated that while the recovery of travel and transportation to pre-COVID levels will take some time, e-commerce was continuing to expand more quickly than food delivery and online media.
According to the report, offline-to-online behavior adjustments during the pandemic have helped digital financial services, which include payments, remittances, lending, investments, and insurance, have strong growth from 2021 to 2022.
Among these services, insurance saw the most growth, increasing 31% year over year, while lending increased by 25%.
The adoption of digital technology is growing less quickly.
In the same survey, it was said that after years of acceleration, the growth of digital adoption is now leveling. This occurs as consumers start doing their shopping offline again in 2022 as the economies of Southeast Asia reopen their borders following lengthy lockdowns.
Additionally, Southeast Asian consumers and the digital economy have been impacted by current macroeconomic situations including rising inflation rates. According to the paper, China’s zero-Covid regulations, which have been implemented in some cases, have resulted in supply chains being disrupted, lower discretionary income owing to a slowdown, and decreased availability to products for consumers.
As online purchasing grows commonplace, Southeast Asia’s online economy is still on track to surpass $1 trillion by 2030, according to the report.
From 2022 to 2025, GMV is anticipated to expand by double digits in each of the six nations.
According to the analysis, Vietnam will take the lead with a 31% increase in GMV from $23 billion in 2022 to $49 billion in 2025. With a projected GMV increase of 20%, from $20 billion in 2022 to $35 billion in 2025, the Philippines follows closely behind.
Conservative Investors
In the first half of 2022, investments continued to grow strongly, but investors started to exercise more caution.
The majority of investors do not anticipate a return to the 2021 transaction activity and value peaks in the next two years, the research stated. As a result, investors will remain cautious in the short term.
