Southeast Asia’s internet economy growth to slow in 2023

“On Wednesday, Southeast Asia’s internet economy is predict to increase by 11% annually in 2023, according to a recently released annual industry report, marking a decrease from the 20% growth recorded the previous year.”

Southeast Asia’s internet economy growth: “Google, Temasek Holdings, a state investor in Singapore, and global business consultant Bain & Company have released a survey, which predicts that the internet economy in the region will decrease from $330 billion to $295 billion by 2025.”

In a joint statement, they stated, “Digital economy sectors are showing positive growth trajectories, with travel and transport on track to exceed pre-pandemic levels by 2024.”

The projection was lowered mostly due to a shift in long-term objectives and post-pandemic stabilization. Florian Hoppe, Partner and Head of Vector in Asia-Pacific at Bain & Company, predicted that things should proceed reasonably steadily until 2025.

The eleven-country region is home to almost half a billion people, with a growing middle class, a primarily youthful population, and widespread smartphone usage, making it one of the fastest-growing internet markets globally.

The analysis projects that Vietnam’s digital economy would expand at a rate of 20% annually between 2023 and 2025, making it on course to reach approximately $45 billion by that year, making it the fastest-growing country in Southeast Asia, after the Philippines.

According to the report, “digital payment continues to grow in Vietnam driven by strong government support, investment from commercial banks, and the widespread popularity of QR codes.”

“The nation’s central bank is also stating that it anticipates the trend to pick up speed as it encourages cashless transactions in rural and remote locations.”

“Digital Economy in Southeast Asia: Spending Trends, Investment Reserves, and Funding Challenges”

According to the report, which also includes coverage of Indonesia, Thailand, Vietnam, Singapore, Malaysia, and the Philippines, private spending for industries tied to the digital economy has decreased from record highs in 2021 to 2017 levels.

However, even though investors are growing more cautious, cash reserves for investments are still growing.

In line with worldwide movements towards high cost of capital and difficulties across the funding lifecycle, the report stated that “Southeast Asia’s digital businesses need to prove that quality deals with visible exit pathways are readily available” in order to escape current funding winter.

By year’s end in 2022, venture capitalists had $15.7 billion available to fund deals, the research states.

The ability of businesses to quickly turn a profit is exactly what matters. Funding will return more quickly the sooner they resolve this, according to Temasek’s Head of Southeast Asia, Fock Wai Hoong.