Southeast Asia Digital Economy to Reach $368 Billion as AI Use Surges
Southeast Asia’s digital economy is set to reach $368 billion in 2026 as AI use surges, with $1 trillion forecast by 2035 and major upgrades now needed.
Summary
Google, Temasek and Bain & Company’s 11th annual e-Conomy SEA report, Building the Intelligent Economy, projects Southeast Asia’s digital economy will grow 17% year over year to US$368 billion in 2026 and exceed US$1 trillion by 2035. Generative AI already serves 243 million people, 58% of the working population, and is scaling four times faster than mobile internet; token usage could rise 60-fold by 2030. The study covers 10 countries; Timor-Leste is excluded because data availability and quality are limited.
E-commerce leads at US$226 billion GMV, up 18%, with multimodal discovery and in-app assistants lifting conversions 10% and orders by as much as 75%. Online travel reaches US$59 billion GMV, up 10%; search remains first for planning, while generative AI has overtaken social media for second. Online media revenue hits US$44 billion, up 22%, with personalized feeds and ads improving quality engagement 10% to 20% as commerce media reaches US$4 billion. Mobility and food delivery GMV rises 15% to US$40 billion through predictions, routing and pooled rides. Digital financial services GTV grows 16% to US$1.65 trillion, adding real-time fraud detection, credit access and tailored advice, while Singapore leads regional digital wealth platforms.
Automation already serves 72% of users; 75% would let agents compare prices and transact. Trust has increased for 62%, driven by track records, 56%, familiarity, 55%, and accuracy, 53%, but users require privacy safeguards, 44%, capability transparency, 36%, and reversible transactions, 30%. Businesses must lower model costs, prove value and enforce safety while moving from answers to end-to-end tasks. Data center capacity must roughly triple within five years, supported by Singapore’s binding PUE rules, Malaysia’s CRESS clean-power model and ASEAN’s DEFA, due in November 2026 as the first region-wide digital trade pact.
Positives
- US$368 billion in 2026 GMV would represent 17% annual growth and keep Southeast Asia on course to exceed US$1 trillion by 2035.
- 243 million people, or 58% of the working population, already use generative AI across Southeast Asia.
- AI assistants lift e-commerce conversions by 10% and can increase order volumes by as much as 75%.
- 75% of users would allow AI agents to compare prices and complete transactions autonomously.
- US$1.65 trillion in digital financial services GTV supports fraud detection, broader credit access and personalized recommendations.
- ASEAN’s DEFA is scheduled for November 2026 and would become the first region-wide digital trade pact.
Risks & concerns
- Data center capacity must roughly triple within five years to accommodate projected AI demand.
- 44% of users require robust privacy safeguards before becoming comfortable with agentic capabilities.
- Businesses must make AI models more affordable while proving practical value and maintaining clear safety rules.
- Energy demand requires binding efficiency standards and wider clean-power access as AI captures a dominant infrastructure share.
- Timor-Leste remains excluded because digital economy and AI data are too limited for reliable analysis.