Southeast Asia’s digital economy will reach $368 billion in gross merchandise value in 2026, marking a 17% annual increase, Google reported on Wednesday. The projection, published jointly with Temasek and Bain & Company in the 11th annual e-Conomy SEA report, puts the region on track to exceed $1 trillion in digital value by 2035.
Generative AI tools now count 243 million active users across Southeast Asia, representing 58% of the region's working population. Google found that adoption is scaling four times faster than the historical rollout of the mobile internet. Growing trust in automated tools is projected to drive a 60-fold increase in regional AI token usage over the next five years.
E-commerce continues to anchor regional digital spending, rising 18% year-on-year to $226 billion in gross merchandise value. Shoppers using in-app assistants and multimodal search produced 10% higher conversion rates and order volume increases of up to 75%. Digital financial services reached $1,650 billion in gross transaction value, an increase of 16%, supported by fraud detection tools and Singapore’s regional lead in digital wealth platforms.
Online travel grew 10% to $59 billion, with generative AI surpassing social media platforms as the second-most common tool for planning complex travel routes behind search engines. Online media revenue climbed 22% to $44 billion, bolstered by a $4 billion commerce media market, while transport and food delivery expanded 15% to $40 billion through route optimization and shared ride features.
Consumers are showing increased willingness to hand purchasing decisions to software. The report found 72% of regional users already use features like automated price tracking, and 75% said they would allow AI agents to compare prices and finalize transactions autonomously. Trust in AI tools grew among 62% of respondents over the past year, led by output accuracy, proven operational records, and familiarity. To sustain adoption, 44% of surveyed users cited a need for strict privacy safeguards, while 30% required mechanisms to reverse automated transactions.
Data center capacity across Southeast Asia must expand roughly threefold over the next five years to support computational demand from AI workloads. Google pointed to emerging regional standards to manage this load, including Singapore’s binding Power Usage Effectiveness limits under its Digital Infrastructure Bill and Malaysia’s Corporate Renewable Energy Supply Scheme. Cross-border digital rules are scheduled to follow in November 2026, when member states plan to implement the ASEAN Digital Economy Framework Agreement.
