Southeast Asia’s Digital Economy Projected to Reach $368 Billion by 2026
Generative AI has become a vital part of everyday life for 243 million people in Southeast Asia, representing 58% of the working population. This rapid adoption is significantly impacting the region’s economy, as highlighted in the 11th edition of the annual e-Conomy SEA report.
The report, titled Building the Intelligent Economy and produced by Google, Temasek, and Bain & Company, indicates that widespread AI implementation is driving the digital economy to grow 17% year-on-year (YoY), reaching an estimated $368 billion in Gross Merchandise Value (GMV) by 2026. This growth trajectory positions the economy to surpass $1 trillion by 2035.
According to the report, the increasing confidence in agentic commerce is expected to lead to a 60-fold surge in regional AI usage over the next five years.
Key Takeaways from the e-Conomy SEA 2026 Report
1. AI is sustaining growth in every sector.
AI is transforming various aspects of life, shopping, and transportation across the digital economy. E-commerce, valued at $226 billion GMV and growing at 18% YoY, is at the forefront of this shift. Shoppers are utilizing multimodal discovery and in-app assistants, resulting in 10% higher conversion rates and order volume increases of up to 75%.
In the online travel sector, which has a GMV of $59 billion and is growing at 10% YoY, traditional search engines remain the primary tool for travel planning, while generative AI has surpassed social media as the second-most utilized resource for organizing itineraries.
Online media, generating $44 billion in revenue and growing at 22% YoY, is enhancing content personalization and connecting audiences with more relevant advertisements, leading to a 10% to 20% increase in engagement quality.
Mobility and food delivery services, valued at $40 billion GMV and growing at 15% YoY, are improving consumer experiences through predictive suggestions and smarter routing.
Digital financial services, with a Gross Transaction Value (GTV) of $1,650 billion and a 16% YoY growth, are providing real-time fraud detection and personalized financial recommendations, complementing traditional advice.
2. Consumer trust will help unlock the era of agentic commerce.
Digital automation is well-established in the region, with 72% of users relying on features like price tracking. This familiarity is paving the way for agentic commerce, as 75% of users express willingness to allow AI agents to autonomously compare prices and complete transactions.
Regional optimism is evident, with 62% of Southeast Asians viewing AI as a net societal benefit. Trust in AI tools has increased due to proven track records, rising familiarity, and output accuracy, creating a favorable environment for deeper integration of AI capabilities.
3. Four major areas must adapt to enable AI adoption.
To accommodate a projected 60-fold increase in AI usage by 2030, the digital ecosystem in Southeast Asia must evolve across four critical areas:
- Accelerated agentic adoption and sustainable economics: Businesses should utilize AI for multi-step tasks while ensuring strong privacy safeguards and clear safety rules.
- Scaled physical infrastructure: Rapid expansion of data center capacity is necessary to meet increasing compute demands, requiring a threefold increase over the next five years.
- Strict model and energy efficiency: National frameworks must guide the development of next-generation facilities, supported by expanded access to clean energy.
- Unified regional governance: The upcoming ASEAN Digital Economy Framework Agreement (DEFA) aims to establish a region-wide digital trade pact, facilitating further growth in Southeast Asia’s digital economy.
The findings of this report underscore the transformative potential of AI in Southeast Asia’s digital landscape.
Source: Google AI Blog