SEA’s digital economy races towards US$1 trillion as AI takes the wheel

Southeast Asia’s digital economy is projected to reach US$368 billion in gross merchandise value (GMV) in 2026, growing 17% year-on-year as artificial intelligence increasingly shapes how consumers discover, compare and buy products and services online.

According to the 11th annual "e-Conomy SEA report" by Google, Temasek and Bain & Company, the region’s digital economy is on track to exceed US$1 trillion in GMV by 2035.

Titled "Building the intelligent economy", the report found that generative AI adoption has reached 243 million people across Southeast Asia, equivalent to 58% of the region’s working population. Adoption has scaled four times faster than mobile internet in under three years.

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However, the report pointed to a gap between AI adoption and the depth of its use. Regional AI usage currently sits at between five and seven quadrillion tokens per capita, roughly 10% of US levels, with consumers accounting for around 60% of usage, largely for everyday work and study tasks.

Enterprise usage is more prominent in mature markets such as Singapore and Malaysia, where enterprise workloads account for between 45% and 60% of AI usage. Overall AI usage across Southeast Asia is projected to grow by as much as 60-fold by 2030 as consumers move beyond basic queries towards delegating more complex tasks to AI agents. 

AI is also becoming increasingly embedded across the consumer journey.

eCommerce remains the region’s largest digital sector, with GMV projected to rise 18% year-on-year to US$226 billion in 2026.

The report found that 69% of shoppers are using AI to compare complex purchases such as electronics, while 93% of consumers already trust AI as part of their purchasing journeys.

Early case studies cited in the report found AI helped commerce players achieve a 10% year-on-year lift in conversion and up to a 75% increase in average order value.

In online travel, which is projected to reach US$59 billion in GMV, standalone GenAI platforms have overtaken social media as the second most-used tool in travel planning. GenAI accounts for 26% of planning journeys, compared with 23% for social media, as travellers use the technology to evaluate options and build personalised itineraries.

Meanwhile, online media remains Southeast Asia’s fastest-growing digital sector, with revenue projected to climb 22% year-on-year to US$44 billion. The sector covers digital advertising, video streaming and gaming, with AI being used to improve advertising efficiency and consumer engagement. Commerce media on eCommerce platforms has also grown into a US$4 billion market.

Mobility and food delivery GMV is expected to reach US$40 billion, up 15%, while digital financial services are projected to record US$1.65 trillion in gross transaction value, a 16% increase. AI applications across these sectors include predictive recommendations, voice-assisted bookings, route optimisation, customer acquisition, credit assessment and fraud detection.

Consumers are also becoming more comfortable handing tasks over to AI. The report found that 72% of users already rely on everyday automations, while 75% would be willing to allow AI agents to independently find the best prices and complete purchases on their behalf.

Trust is rising alongside adoption, with 62% of Southeast Asian users saying they trust AI tools more than they did a year ago.

However, that confidence remains dependent on safeguards, with 44% calling for strong privacy protections and 30% wanting the ability to reverse actions carried out autonomously by AI.

Investment is following the shift. Companies with core AI products captured 80% of deal value within Southeast Asia’s digital applications sector over the past six months, up from 30% in the second half of 2024. Separately, private capital deal value in AI compute and digital infrastructure reached US$20 billion over the past 12 months.

Singapore widens its AI lead

Closer to home, Singapore’s digital economy is projected to reach US$31 billion in GMV in 2026, up 8% year-on-year, before growing to US$59 billion by 2035.

The report positioned Singapore as Southeast Asia’s most mature AI market, with GenAI penetration reaching 70% of its working population, or around 3.2 million people. Enterprise workloads account for between 45% and 60% of AI usage in Singapore and Malaysia, while Singapore’s per capita AI usage is estimated to be nearly half that of the US and around twice that of Europe.

Singapore also leads the region in online retail penetration, which stands at nearly 16%, as well as digital wealth platform adoption, where active user penetration is nearly three times that of the next-ranked Southeast Asian market.

Much of Southeast Asia’s AI infrastructure funding has flowed into platforms headquartered in Singapore, according to the report. The country is also adding 200MW of green energy to its existing 1.4GW compute base as demand for AI infrastructure grows.

Looking ahead, meeting Southeast Asia’s projected increase in AI usage will require data centre capacity to expand by around three times over the next five years, alongside improvements in model and energy efficiency, lower inference costs and wider adoption of agentic workflows, the report said.

The upcoming ASEAN Digital Economy Framework Agreement (DEFA), expected in November 2026, is also set to establish a region-wide framework for digital trade as Southeast Asia looks to sustain the growth of its digital economy.

“Southeast Asia is entering an AI decade defined by rapid adoption, economic opportunity, and a distinct pragmatic optimism toward AI,” said Nitin Gajria, managing director for Southeast Asia and South Asia Frontier Markets at Google.

“As people move from basic queries to trusting AI with more complex tasks, Southeast Asia has a unique window to lead the world in agentic commerce. Unlocking that full potential will require clear governance, transparent capabilities, and an unwavering commitment to responsible AI deployment across the whole ecosystem,” he added.

Fock Wai Hoong, head, Asia Pacific (ex. China and India) at Temasek Global Investments, said AI will create significant opportunities for Southeast Asia’s economy, but translating adoption into sustainable growth will require “strong governance, disciplined execution, and resilient business models”.

Florian Hoppe, partner at Bain & Company, said Southeast Asia’s AI story is shifting from how many people use the technology to how deeply they use it.

“Adoption is already among the fastest the region has seen, yet usage per person is a fraction of US levels, and most users remain on free tiers. Closing that gap will drive the next wave of growth,” he said.

On Singapore specifically, Hoppe said the country’s leadership reflects sustained investment in governance, infrastructure and talent, but added that the next measure of success will be whether AI translates into meaningful business outcomes. 

As AI becomes more deeply embedded across sectors, the winners will be those that redesign workflows and organisations around it, not how quickly they deploy it.

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