Southeast Asia's digital economy to reach 56% of region's GDP by 2027

According to the digital financial solutions group UnaFinancial, the gross value added (GVA) of Southeast Asian countries' digital economy made up 45% of the region's GDP in 2022. This economy is forecasted to contribute approximately 56% to the region's GDP by 2027, with digital payments playing a significant role with a contribution of 61.5%.

In 2022, Southeast Asia's digital economy was valued at $1.6 trillion GVA, equivalent to 44.8% of the region's GDP. The Digital payments sector, contributing about $1 trillion of the gross value added, represented a majority share (62.9%) of this economy.

Following Digital payments, there was Electronics & Optical Production (21%), Information and Telecommunication Infrastructure (7.4%), Digital Commerce (5.6%), IT & Software Services (2%), Online Media Market (0.9%), and Mobile Apps (0.3%).

Indonesia held the largest share of the digital economy in Southeast Asia (42.6% or $691.8 billion), followed by Malaysia (15.6%), Singapore (13%), Thailand (11.2%), Vietnam (10.7%), Philippines (5.7%), Myanmar (0.6%), Cambodia (0.3%), Laos (0.2%) and Brunei (0.1%).

As per UnaFinancial's analysts, the distribution aligns with the countries' GDPs, affirming the accuracy of the estimates. Indonesia's leading position is attributed to its population, comprising 41.1% of Southeast Asia's total population in 2022.

Projections for 2027 put the GVA of Southeast Asia's digital economy at an expected $2.35 trillion, marking a 45% increase (+$732 billion) from 2022. This implies that the digital economy will constitute 55.7% of the region's projected GDP in 2027, up from 44.8% in 2022.

In this near future, Digital payments are predicted to remain dominant in the sector, with a share of 61.5%. Digital commerce is projected to expand from 5.6% to 10.1%, Mobile Apps from 0.3% to 0.9%, and the Online Media Market from 0.9% to 1.1%. However, sectors such as Electronic & Optical Production, Telecommunication Infrastructure and IT & Software Services are expected to see their shares marginally decline.

Absolute GVA growth will be experienced across all sectors. The most substantial increase is forecasted in Mobile Apps (+303%), followed by Digital commerce (+160%), Online Media (+75%), Digital Payments (+42%), with Telecommunication Infrastructure and IT & Software reporting growth of (+39% each). The least growth will be seen in Electronic & Optical Production (+21%).

Analysts suggest that "In the next few years, while digital economies of Indonesia, Malaysia, Vietnam, Singapore and the Philippines will make up 97.6% of the total in SEA, the smaller economies of Myanmar, Laos, Cambodia and Brunei may exhibit the fastest growth given the timely introduction of digital technologies." However, they also stress the vulnerability of these smaller economies to various structural transformations due to their reduced GDP size.