Southeast Asia's Digital Economy to Hit $368 Billion by 2026, Fueled by AI

Google, Temasek, and Bain & Company released the 11th e-Conomy SEA report, highlighting that generative AI is now an essential part of daily life for 243 million Southeast Asians. This widespread adoption is propelling the region's digital economy to a projected $368 billion in Gross Merchandise Value (GMV) in 2026, with a path to $1 trillion by 2035. The report underscores the transformative impact of AI on various sectors, from e-commerce to digital financial services, and outlines the necessary infrastructure and policy changes to sustain this growth.

AI Adoption Is Scaling Four Times Faster Than Mobile Internet

The report reveals that 58% of the working population in Southeast Asia, or 243 million people, actively use generative AI. This technology is scaling four times faster than the rollout of mobile internet, significantly impacting various sectors. The digital economy is growing at a rate of 17% year-on-year, driven by AI's integration into everyday activities. Using tokens as a new benchmark for the AI economy, the report projects that growing confidence in agentic commerce will drive a 60-fold surge in regional AI usage over the next five years.

E-Commerce Anchors AI-Driven Sector Growth

1. E-commerce: AI is reshaping how people shop, with personalized experiences driving higher conversions and order volumes. E-commerce is projected to reach $226 billion in GMV in 2026, an 18% year-on-year increase. AI-powered tools like multimodal discovery and in-app assistants help shoppers navigate complex purchases, leading to a 10% higher conversion rate and order volume uplifts as large as 75%.

2. Online Travel: Traditional search engines remain the top platform for travel planning, but generative AI has become the second-most used tool for organizing complex itineraries. The online travel sector is expected to reach $59 billion in GMV, a 10% year-on-year increase.

3. Online Media: AI is personalizing content feeds and connecting audiences with more relevant ads, yielding a 10 to 20% quality engagement uplift. Online media revenue is projected to reach $44 billion, a 22% year-on-year increase. Commerce media is expected to become a $4 billion market.

4. Mobility and Food Delivery: AI-powered offerings like pooled rides and smarter routing are saving consumers time and fueling healthy transactional growth. This sector is expected to reach $40 billion in GMV, a 15% year-on-year increase.

5. Digital Financial Services: AI helps consumers with real-time fraud detection, broader credit access, and personalized financial recommendations. This sector is projected to reach $1,650 billion in Gross Transaction Value (GTV), a 16% year-on-year increase. Singapore's leadership in digital wealth platforms is also contributing to the growth of this sector.

Consumer Trust Paves the Way for Agentic Commerce

Digital automation is already well established across the region, where 72% of users rely on everyday features like price tracking. This familiarity is clearing the runway for agentic commerce, with 75% expressing willingness to let AI agents autonomously compare prices and complete transactions on their behalf. This momentum is rooted in regional optimism: 62% of people in Southeast Asia report greater trust in AI tools today than a year ago, driven by proven track records (56%), rising familiarity (55%), and output accuracy (53%). To feel comfortable using new agentic capabilities, users expect robust privacy safeguards (44%), transparent information on what AI can and cannot do (36%), and the ability to reverse agentic transactions (30%).

Infrastructure and Policy Must Adapt to Support AI Growth

To support a projected 60-fold increase in regional AI usage by 2030, the region's broader digital ecosystem must systematically evolve across four critical conditions:

- Accelerated agentic adoption and sustainable economics: Businesses need to move beyond using AI to answer single questions and start using it to help complete multi-step tasks from start to finish, backed by strong privacy safeguards and clear safety rules. Running AI models must keep getting more affordable and deliver clear, practical value.

- Scaled physical infrastructure: Meeting this trajectory requires a roughly 3x expansion in data center capacity over the next five years, with AI workloads capturing a dominant share of total infrastructure.

- Strict model and energy efficiency: National frameworks, such as Singapore's binding Power Usage Effectiveness (PUE) rules under the Digital Infrastructure Bill, must guide next-generation facilities.

- Unified digital trade policies: New regional trade agreements will help unify and accelerate digital growth across borders.