Southeast Asia's Digital Economy to Hit $368 Billion

Southeast Asia's Digital Economy to Hit $368 Billion

According to the 11th edition of the annual e-Conomy SEA report, titled Building the Intelligent Economy, Southeast Asia's digital economy is projected to reach $368 billion in Gross Merchandise Value (GMV) by 2026. This forecast, attributed to Google, Temasek, and Bain & Company, indicates a year-on-year growth rate of 17% driven by the widespread adoption of generative AI. The report further predicts that the region's digital economy will exceed $1 trillion by 2035.

The Rise of Agentic Commerce

A central theme of the report is the shift toward "agentic commerce," where consumers increasingly trust AI to handle complex, multi-step tasks autonomously. Generative AI has become an essential part of daily life for 243 million Southeast Asians, representing 58% of the working population. The adoption rate of generative AI is scaling four times faster than the rollout of mobile internet in the region.

This growing confidence is quantified by the report's use of tokens as a new benchmark for the AI economy. Google, Temasek, and Bain & Company project that growing confidence in agentic capabilities will drive a 60-fold surge in regional AI usage over the next five years. Currently, 72% of users rely on everyday digital automation features, such as price tracking, which is clearing the runway for agents to autonomously compare prices and complete transactions.

Sector-Specific Growth Drivers

The report details how AI is reshaping specific sectors across the region, contributing to the projected $368 billion valuation in 2026.

E-Commerce

E-commerce anchors the shift, with a Gross Merchandise Value (GMV) of $226 billion and an 18% year-on-year increase. Shoppers are utilizing multimodal discovery and in-app assistants to navigate complex purchases. According to the report, these personalized experiences organically drive 10% higher conversions and order volume uplifts as large as 75%.

Online Travel

The online travel sector, valued at $59 billion GMV with a 10% year-on-year increase, is seeing a change in tool preference. While traditional search engines remain the top platform for planning travel, generative AI has overtaken social media to become the second-most used tool for organizing complex itineraries.

Online Media

Online media is generating $44 billion in revenue with a 22% year-on-year increase. The sector is personalizing content feeds and connecting audiences with more relevant ads. This strategy yields a 10 to 20% quality engagement uplift, with commerce media emerging as a $4 billion market.

Mobility and Food Delivery

Mobility and food delivery services, valued at $40 billion GMV with a 15% year-on-year increase, are saving consumers time through predictive suggestions, smarter routing, and AI-powered offerings like pooled rides.

Digital Financial Services

Digital financial services represent the largest segment by volume, with a Gross Transaction Value (GTV) of $1,650 billion and a 16% year-on-year increase. These services assist consumers with real-time fraud detection, broader credit access, and personalized financial recommendations that complement human advice. Singapore is noted for its regional leadership in digital wealth platforms within this sector.

Consumer Trust and Expectations

The momentum behind these economic projections is rooted in regional optimism. The report states that 62% of people in Southeast Asia report greater trust in AI tools today than a year ago. This trust is driven by three main factors: proven track records (56%), rising familiarity (55%), and output accuracy (53%).

However, for the transition to full agentic commerce to succeed, users expect specific guardrails. To feel comfortable using new autonomous capabilities, the report identifies three key expectations:

• Robust privacy safeguards (44%)
• Transparent information on what AI can and cannot do (36%)
• The ability to reverse agentic transactions (30%)

Infrastructure and Governance Requirements

To support the projected 60-fold increase in regional AI usage by 2030, the report outlines four critical conditions that the digital ecosystem must evolve to meet.

Scaled Physical Infrastructure

Physical expansion must rapidly keep pace with soaring compute demand. The report states that meeting this trajectory requires a ~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 are essential for guiding next-generation facilities. The report highlights Singapore's binding Power Usage Effectiveness (PUE) rules under the Digital Infrastructure Bill as a model. Additionally, expanded clean energy access is required, citing Malaysia's Corporate Renewable Energy Supply Scheme (CRESS) model as an example of necessary infrastructure support.

Unified Regional Governance

Anchoring the trajectory for growth is the upcoming ASEAN Digital Economy Framework Agreement (DEFA), scheduled for November 2026. This agreement is expected to establish the world's first region-wide digital trade pact, providing a framework to unlock further growth in the Southeast Asia digital economy.

Accelerated Agentic Adoption

Businesses must move beyond using AI to answer single questions and start using it to help complete multi-step tasks from start to finish. This shift requires strong privacy safeguards and clear safety rules, alongside ensuring that running AI models remains affordable to deliver clear, practical value for businesses of all sizes.

Conclusion

The 11th e-Conomy SEA report paints a picture of a rapidly evolving digital landscape where generative AI is not merely a tool but a foundational element of daily life and commerce. With 243 million active users and a trajectory toward a $1 trillion economy by 2035, the region is poised for significant transformation. However, realizing this potential depends on the systematic evolution of infrastructure, energy efficiency, and regional governance. As the report notes, the path forward requires balancing the rapid adoption of agentic capabilities with the necessary safeguards to maintain consumer trust and ensure sustainable economic growth.

Source:

• Google, Temasek, and Bain & Company. (2026). Building the Intelligent Economy: e-Conomy SEA 2026. https://blog.google/company-news/inside-google/around-the-globe/google-asia/e-conomy-sea-report-2026