Southeast Asia’s digital economy is projected to reach $368 billion in gross merchandise value (GMV) in 2026, growing 17% year-on-year despite macroeconomic pressures, as artificial intelligence (AI) adoption reshapes consumer behaviour and investment across the region, according to a report by Google, Temasek and Bain & Company.
The 11th edition of the e-Conomy SEA report, released on Wednesday, forecasts that the region’s digital economy will exceed $1 trillion in GMV by 2035. It identifies AI as a key growth driver, with opportunities increasingly dependent on how businesses convert widespread adoption into deeper usage and commercial returns.
Generative AI has reached 243 million people across Southeast Asia’s six largest markets, equivalent to 58% of the working population, in less than three years. However, AI usage per capita remains at roughly 10% of US levels, highlighting the gap between adoption and the intensity of use.
“Southeast Asia’s AI story is shifting from how many people use it to how deeply they use it,” said Florian Hoppe, a partner at Bain & Company.
“Closing that gap will drive the next wave of growth,” he said, adding that falling token costs and expanding enterprise workloads would make AI capabilities more accessible.
The report estimates that regional AI usage could increase as much as 60-fold by 2030 as consumers move from basic queries towards delegating more complex tasks to AI agents. Consumers currently account for about 60% of AI usage, while enterprise workloads are more prominent in Singapore and Malaysia, where they represent 45% to 60% of usage.
AI draws investment
AI-focused companies captured about 80% of private funding value in Southeast Asia’s digital economy in the first half of 2026, up from 30% in the second half of 2024. Private funding for digital applications has stabilised at around $8 billion annually, with investors increasingly backing AI businesses alongside established digital economy companies.
Investment is also flowing into the infrastructure needed to support AI workloads. Capital deployed into the region’s AI compute and digital infrastructure sector reached $20 billion over the past 12 months, led by the $11 billion acquisition of ST Telemedia Global Data Centres, according to the report.
“AI will create significant opportunities for Southeast Asia’s economy. However, translating adoption into sustainable growth will require strong governance, disciplined execution, and resilient business models,” said Fock Wai Hoong, head of Asia Pacific excluding China and India at Temasek Global Investments.
Temasek remains committed to the region, investing in businesses with established models and helping them create long-term value through its capital, networks and partnerships, he said.
The report said meeting projected AI demand would require data centre capacity to expand about threefold over the next five years. Falling computing costs, reliable AI systems, stronger governance and access to clean energy will also be important to scaling adoption.
AI reshapes digital commerce
AI is increasingly influencing how consumers discover, compare and purchase products. E-commerce GMV is projected to reach $226 billion in 2026, up 18% year-on-year, with 69% of consumers using AI to compare complex purchases and 93% saying they trust AI recommendations in purchasing journeys.
The report cited early examples of AI improvements delivering a 10% year-on-year increase in conversion rates and lifting average order values by as much as 75%. Online travel GMV is forecast to reach $59 billion, up 10%, while mobility and food delivery are expected to generate $40 billion, up 15%.
Online media, which includes digital advertising, streaming and gaming, is projected to generate $44 billion in revenue, a 22% annual increase. AI-powered advertising and commerce media are creating additional monetisation opportunities for digital platforms.
Consumer willingness to delegate tasks to AI is also growing. The report found that 75% of users were open to allowing AI agents to find the best prices and complete purchases on their behalf, although privacy protections and the ability to reverse automated actions remain important conditions for adoption.
“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.
Unlocking the region’s potential will require clear governance, transparent AI capabilities and responsible deployment across the ecosystem, he said.
Meanwhile, initial public offering proceeds in Southeast Asia rebounded to more than $8.5 billion over the past 12 months, more than doubling from $3.6 billion in the preceding period. Listings in Singapore and Malaysia helped drive the increase, with activity spanning digital infrastructure, digital applications and healthcare.
The report covers 10 Southeast Asian markets and five core digital economy sectors: e-commerce, online travel, online media, mobility and food, and digital financial services.
