Facing Headwinds, Southeast Asia's Digital Economy Could Grow at Slowest Pace in Years

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  • Southeast Asia's digital economy could grow at the slowest pace in years amid global macroeconomic headwinds, according to a report from Google, Temasek and Bain.
  • Southeast Asia's digital economy is projected to grow 11% in 2023 to $218 billion, down from 20% growth in 2022 and 38% the year before.
  • Private funding dropped to its lowest level in six years.

Southeast Asian tech giants Grab (GRAB), Sea (SE), and others may face what could be the slowest growth in the region's digital economy in years amid global macroeconomic headwinds, as prices rise and consumer sentiment lingers in negative territory, according a report from Google, Temasek and Bain.

Google, Temasek and Bain project Southeast Asia's digital economy to grow 11% this year to $218 billion, down from a growth rate of 20% in 2022 and 38% the year before.

Covering Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, the report noted that while consumer sentiment in the region has started to rebound from recent lows as inflation slows, it remains in negative territory for many of the countries tracked as prices in the region continue to rise.

Thanks in part to the high cost of capital and challenges at various stages of the funding lifecycle, private funding also dropped to its lowest level in six years.

However, the report suggested that despite the recent dip in investor appetite, the region could be ripe for future investment with "dry power" — the amount of cash reserves or liquid assets available for use — growing to $15.7 billion in 2022, a surge from $12.4 billion in 2021.

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  1. Bain & Company. “e-Conomy SEA 2022.”

  2. Bain & Company. "e-Conomy SEA 2023."

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