SEA's digital economy set to surpass US$300B, Singapore leads AI growth

Southeast Asia’s digital economy is on a strong trajectory to surpass US$300 billion in gross merchandise value (GMV) by 2025, according to the 10th edition of the annual e-Conomy SEA report from Google, Temasek, and Bain & Company. Revenue growth is expected to reach US$135 billion as profitability accelerates across the region, reflecting a decade of rapid digital adoption and effective monetisation strategies.

Despite continued macroeconomic pressures, double-digit growth persists across sectors, from eCommerce to digital financial services. The market is consolidating as leading regional platforms scale, leveraging economies of scale to create competitive advantages.

According to the report, video commerce now accounts for roughly 25% of GMV, driven by high-volume, lower-value transactions, trusted local creator recommendations, and seamless social-to-eCommerce integrations. The creator economy is also diversifying, with niche and micro-influencers emerging as new drivers of sales.

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eCommerce, food delivery, transport, and online travel continue to see strong momentum. Food delivery platforms are approaching profitability through optimised logistics, advertising revenue, loyalty subscriptions, and cloud kitchens, with GMV projected to reach US$23 billion by 2025. Transport services are growing via tiered offerings and subscription bundles, while online travel is projected to hit US$51 billion in GMV, boosted by travel from China and India, and popular destinations such as Japan gaining ground.

In addition, digital media and entertainment show a more nuanced picture. Online advertising continues to expand through retail media networks, AI-driven ad optimisation, and video commerce penetration. Gaming is growing steadily, particularly in Indonesia, though player retention is increasingly competitive. Video and music platforms are slowing slightly due to price adjustments and changing user behaviours, though local content and short-form formats remain key drivers.

Digital financial services are maturing beyond payments. Embedded lending and cross-border QR interoperability are expanding financial inclusion, while digital wealth platforms are rapidly scaling assets under management. Investor interest remains strong, with private funding rising 15% YoY to about US$8 billion, concentrated in late-stage deals and the DFS sector. AI startups are a bright spot, capturing over 30% of funding, with investors prioritising software, services, and deep tech in Singapore, Vietnam, and Malaysia.

Southeast Asia is also emerging as a global AI hotspot, with consumer interest in AI three times the global average, revealed the report. Five countries —Singapore, Brunei, the Philippines, Indonesia, and Malaysia —rank among the world’s top 20 for multimodal AI adoption.

Nearly half of users expect AI to save time on research and decision-making, while 79% of workers have learned to use AI, and 43% actively use it professionally. Planned data centre capacity is set to grow 180% across the region, outpacing the rest of Asia Pacific, ensuring infrastructure is in place to support this AI boom.

Singapore drives SEA's digital and AI growth 

The city-state’s digital economy is projected to reach US$29 billion in GMV by 2025, powered by strong growth in transport and food, eCommerce, online travel, and online media. Transport and food services are expected to grow 12% to US$6 billion, while online media is set to surge 13% to US$3.4 billion. Digital financial services are also expanding, with digital lending projected to hit US$30 billion in loan book balance, digital wealth climbing to US$44 billion in assets under management, and digital insurance reaching US$0.5 billion in premiums.

Despite global headwinds, including Singapore’s high trade-to-GDP ratio and exposure to external shocks, the government has implemented measures such as a tariff task force, expanded trade partnerships, and eased monetary policy to sustain growth. Tourism is benefiting from a focus on premium experiences, attracting high-spending visitors through world-class entertainment, major events, and high-end gaming.

Singapore is also asserting leadership in AI, commanding US$1.31 billion in private AI funding, the highest in SEA, with 55% of ASEAN-10 AI investments concentrated in the city-state.

AI adoption is robust, with 55% of users interacting with AI daily and 45% expecting faster decision-making and time savings. Video commerce is thriving, with sellers and stores growing 125% YoY, transaction volumes up 30%, and average order values triple the SEA average.

Meanwhile, digital banks are finding sustainable niches, narrowing losses through SME banking, micro-consumer credit, and strategic ecosystem partnerships. Collectively, these efforts reinforce Singapore’s position as a leading hub for digital innovation, AI development, and economic resilience, supporting the broader growth of Southeast Asia’s digital economy.

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