Google: Southeast Asia e-Economy Report 2022

Google released the "Southeast Asia e-Economy Report 2022", the main findings include:

Coping with macroeconomic headwinds

Just as Southeast Asian countries were beginning to return to pre-pandemic normalcy, global headwinds began to set in, threatening to derail a full economic recovery. Rising interest rates and high inflationary pressures have also been weighing on consumer demand, especially in the discretionary sector that is at the heart of the digital economy.

Approaching $200 billion amid turbulent waters

Despite these macroeconomic headwinds, SEA’s digital economy is on track to reach a gross merchandise value (GMV) of approximately $200 billion by 2022. In fact, it reached the expected threshold three years ahead of schedule. Even today, digital adoption continues to rise, albeit at a slower pace than at the height of the pandemic.

Urban consumers still drive the economy

In urban areas, affluent consumers and their young digital natives continue to represent the largest part of the digital economy. For both segments, growth opportunities lie in deeper engagement, including more frequent and valuable orders, cross-selling services such as subscriptions or consumer loans. At the same time, spending by “budget-constrained” urban and suburban consumers remains low, leaving digital players to find more economically sustainable ways to serve enjoyment.

Industries face different growth trends

SEA's digital economy sectors follow three distinct trend lines. E-commerce follows an S-shaped growth curve, continuing its growth trajectory but starting from a higher point after a sharp acceleration during the pandemic. Other businesses such as food delivery and online media are returning to their trend line after two years of surging. Finally, travel and transportation are following a U-shaped recovery, still miles away from pre-pandemic levels.

Favorable conditions to enhance financial services

Driven by the shift from offline to online and the positive financial markets of the past few years, the adoption and use of digital financial services (DFS) has been booming across the board. However, with rising interest rates and a riskier lending environment, fintechs, platforms and newly launched digital banks will face stress tests on their business models. At the same time, banks and insurance companies are rapidly digitizing their services and maintaining their support for affluent consumers.