Travel TechnologyNew e-Conomy SEA report fears consumer travel demand will take years to reach 2019 levels.

A+ for economy in SE Asia – with some reservations

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Travel recovery faces headwinds and will take time to recover.
Travel recovery faces headwinds and will take time to recover. Photo Credit: Adobe/NicoElNino

A deep dive into the health and prospects for Southeast Asia’s digital economy has predicted little slowdown across six countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – although some sectors and some destinations will fare better than others.

The e-Conomy SEA 2022 report compiled by Google, Temasek and Bain & Company investigated trends and insights of the five mainstay digital sectors - e-commerce, travel, food and transport, online media, and digital financial services (DFS).

The report projects that Southeast Asia’s digital economy is on track to hit US$200 billion gross market value in 2022, three years earlier than was anticipated in the inaugural report shared in 2016.

Post-pandemic, transport and online travel sectors are expecting strong recovery, 43% and 115% YoY growth respectively, as international travel resumes.

However, these sectors face headwinds such as increasing fuel prices, supply shortages, and continuing travel restrictions in high-value corridors (e.g. China, South Korea), while consumer demand is suffering from skyrocketing prices.

Recovery is expected to be gradual and take years to reach 2019 levels, the report noted.

Below are key findings from the report:

Changing priorities
Most digital players are now shifting priorities from new customer acquisition to deeper engagement with existing customers to increase usage and value.

Driving social progress
Southeast Asia’s digital economy has the potential to reach greater heights and at the same time drive social progress and make a positive impact on the environment. “Together with businesses, governments and communities, Temasek is committed to using our catalytic capital to spur sustainable and inclusive growth so that every generation prospers,” said Fock Wai Hoong, deputy head, technology & consumer Southeast Asia, Temasek.

Doubling down on inclusivity
While increasing profitability and maintaining growth momentum in the next two to three years has become a priority for companies across the
region, it’s just as important to ensure the digital economy scales in an environmentally and socially sustainable way.

“Addressing ESG concerns and doubling down on our collective efforts to improve digital and financial inclusion will be a key to unlock the full potential of Southeast Asia’s 1 trillion digital economy by 2030,” noted Stephanie Davis, vice president, Google Southeast Asia.

Turbulence ahead
The acceleration of the digital economy during the pandemic has unlocked significant value for industry sectors, but it is critical to recognise that the new macro turbulences ahead will see different growth archetypes emerging across verticals.

“We are seeing market leaders take a longer-term recovery strategy and invest in capabilities to target markets and consumer segments with higher value generation potential,” said Florian Hoppe, partner and head of digital practice in Asia-Pacific, Bain & Company.

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