Google: Southeast Asia e-commerce report 2023

Google released the "2023 Southeast Asia E-commerce Report". Compared with other parts of the world, Southeast Asia is more resilient to global macroeconomic headwinds. Gross domestic product (GDP) growth remains above 4%, and inflation has dropped to 3%.

Investors reassess expectations

Private financing in Southeast Asia has fallen to its lowest level in six years, in line with a global trend of rising capital costs and more problems in the funding cycle. As Southeast Asian funds return less capital to investors than funds focused on other regions, exits remain a top concern for investors.

Profits are rising

To achieve profitability goals, digital enterprises have shifted their focus to monetization. In 2023, Southeast Asia's digital economy will generate $100 billion in revenue, with a compound annual growth rate of 27% since 2021, 1.7 times the growth rate of gross merchandise value (GMV). E-commerce, travel, transportation and media contributed $70 billion in revenue. In 2023, GMV is still expected to grow by 11% to $218 billion.

The financial services industry is at an inflection point

Consumers are rapidly adopting digital financial services (DFS). Cash is no longer king as digital payments now account for more than 50% of transactions in the region. High interest rates are good for deposits and wealth management but pose a challenge for lending. Non-performing loans remain under control.

Attract high-value users

As companies seek to accelerate profitability, attracting high-value users has become key to achieving sustainable unit economics. The top 30% of consumers in Southeast Asia account for more than 70% of digital economy spending.

Bridging the digital economy divide

Digital inclusion has made progress in the region over the past few years, with connectivity in some rural areas increasing threefold since 2015.

The way forward: profitable growth

Southeast Asia still has a lot of room to grow: favorable demographics, growing wealth, and an increasingly urbanized population lay the foundation for future digital economic growth.