The latest edition of the e-Conomy SEA Report entitled “Reaching New Heights: Navigating the Path to Profitable Growth,” projects that the Philippine digital economy is set to achieve a remarkable US$24B in Gross Merchandise Value (GMV) by the end of 2023. The growth, at a robust Compound Annual Growth Rate (CAGR) of 13%, is primarily attributed to the flourishing eCommerce sector.
The annual report, drawing insights from Google Trends, Temasek, and Bain & Company analyses, as well as industry sources and expert interviews, sheds light on the digital economies of six Southeast Asian countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
This year’s report introduces revenue figures alongside GMV, offering a more comprehensive view of businesses accelerating growth amid macroeconomic challenges. Southeast Asia’s digital economy is anticipated to generate US$100B in revenue this year, expanding 1.7 times faster than the region’s GMV. The report delves into the potential of increasing digital participation to unlock further growth in the region’s digital landscape.
“With continued double-digit climb towards $35B by 2025, the country’s digital economy continues to exhibit resilience and generate opportunities for Filipinos despite macroeconomic headwinds. This momentum is poised to continue, fueled by the immense potential of AI and the digital participation of internet users outside Metro Manila which could drive medium to long term growth,” according to Nikki Del Gallego, Head of Data and Insights at Google Philippines.
eCommerce remains the powerhouse, constituting 70% of overall online activities and serving as the primary driver of the Philippine digital economy’s expansion. The shift from informal, unorganized commerce to structured digital platforms is propelling e-commerce towards a projected US$24B GMV by 2025, at a staggering 21% CAGR. Following closely are Online Media, set to reach US$5B, and Online Travel, expected to grow to US$4B by 2025.
Online Travel emerges as the fastest-growing sector from 2022 to 2023, experiencing an 88% growth, fueled by the sustained momentum in tourism.
“It really is quite a feat that both Southeast Asia’s digital economy GMV and revenue continued their double-digit growth momentum despite this challenging macroeconomic environment, with revenue breaking the $100B mark in 2023. More than anything, this shows the resilience of the Southeast Asia digital economy and that the key players are figuring out the monetization puzzle and making headway towards healthier unit economics. Despite external headwinds, we are optimistic that the digital economy — both for SEA and the Philippines – will continue to grow substantially in the longer run,” said Bennett Aquino, Partner, Bain & Company.
The Philippines stands out in 2023 with the fastest-growing Transport and Food, Online Media, and Online Travel sectors in Southeast Asia. Both domestic and regional transport providers are strategically expanding to outlying cities to foster long-term growth. Businesses are capitalizing on this trend by enhancing their two-wheeler offerings, providing a more affordable alternative mode of transportation.
Key insights into the Philippine digital economy include:
- Continued Healthy Expansion:
Rising domestic demand, recovery in the services sector, lower unemployment rates, increased overseas remittances, and tourism recovery are expected to drive growth over the medium to long term. - Online Media Growth:
Comprising music, video streaming, and online gaming, Online Media is projected to reach US$3B GMV in 2023, with a 13% CAGR. This sector is anticipated to hit US$5B by 2025, growing at a 19% CAGR. - Transport and Food Delivery:
Projected to reach US$2B GMV in 2023, with a continued 19% CAGR, hitting US$3B GMV in 2025. The momentum in mobility, including the return to the office, travel, dining out, and brick-and-mortar shopping, contributes to Transport’s growth. - Digital Payments Surge:
Digital Payments are set to hit US$93B this year and $126 billion by 2025. eWallets and account-to-account (A2A) payment rails are poised for the fastest growth due to lower costs to merchants.
AI Driving Profitable Growth
Enhancing operational efficiency and improving user experience is pivotal for companies aiming at profitable growth, and artificial intelligence (AI) is positioned to play a crucial role. AI can add value in areas such as inventory management, route optimization, personalized content recommendations in online media, and fraud detection and prevention, bolstering security for consumers and merchants.
In a bid to contribute to building a Digital Philippines with AI, Google has launched generative AI skilling courses, available at no cost under its Cloud Skills Boost Program, making AI career paths more accessible. Additionally, through the Google for AI Startups Cloud Program, Google is supporting seed to early-stage startups using AI as a core technology to develop innovative products or solutions.
Download a copy of the e-Conomy SEA Report 2023 here.