South-east Asia digital economy to hit US$368 billion GMV in 2026, US$1.1 trillion in 2035: report

[SINGAPORE] The digital economy in South-east Asia is set to hit US$368 billion in gross merchandise value (GMV) in 2026, a 17 per cent rise from US$315 billion in 2025, based on the e-Conomy SEA report by Bain, Google and Temasek.

The region is forecast to hit US$1.1 trillion in GMV by 2035, showing its resilience despite macroeconomic and geopolitical challenges.

E-commerce will contribute the bulk of the growth, with forecasts of US$226 billion in GMV for 2026 and US$820 billion in GMV for 2035. The sector is strengthening its engagement and penetration in South-east Asia via a number of ways including loyalty programmes, free shipping and a wider selection of products.

Artificial intelligence is also aiding e-commerce to improve product discovery and recommendations, resulting in more customer conversions.

The technology is now playing a bigger role in boosting GMV in South-east Asia’s digital economy. It is becoming a key tool in online ads, sharpening campaign efficiency and targeting to unlock incremental value.

Online ads should remain the biggest contributor for online media, as the sector is projected to hit US$44 billion in revenue for 2026 and US$97 billion in 2035.

AI in South-east Asia

Across Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, about 58 per cent of the working population or over 243 million people now use generative AI. The Internet took over a decade to reach the same milestone that GenAI achieved in three years, according to the report.

AI usage is largely consumer-led in South-east Asia, with consumers spending between three quintillion and four quintillion tokens on tasks, compared to between two quintillion and three quintillion for enterprise-led use cases.

But enterprise workloads form the bulk of AI use by percentage of tokens in mature markets such as Singapore and Malaysia. Enterprises in Singapore clocked in 55 to 60 per cent of AI usage while enterprises in Malaysia recorded 45 to 50 per cent of AI usage.

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Singapore leads the region in GenAI adoption, with Malaysia second and Vietnam third. The city-state led in consumer tokens per GenAI user, weekly users and GenAI penetration in the region. But Vietnam led in daily users at 26 per cent of the Internet population.

The frameworks that Singapore has in place for AI, such as the National AI Strategy 2.0, have given businesses the confidence to invest into infrastructure, skills and talent, said Florian Hoppe, partner, Bain & Company.

“The result is that per capita AI use is already nearly half the US level and about twice Europe’s, by our estimate. But the real measure of success is shifting from adoption to meaningful business outcomes,” he added.