In recent years, we’ve seen Southeast Asia’s digital economy grow and weather the obstacles of the pandemic and macroeconomic headwinds. This year, e-Conomy SEA 2023 by Google, Temasek and Bain & Company shows us just how robust and adaptable Southeast Asia’s digital economy remains. The region’s digital economy GMV (Gross Merchandise Value) is growing 11% YoY and is set to hit $218 billion in 2023. The revenue from SEA’ digital economy is poised to hit $100 billion this year, growing 1.7x as fast as the region’s GMV.
Thailand's digital economy also continues to show incredible resilience despite macroeconomic uncertainty. The country’s digital economy is projected to reach $36 billion in GMV in 2023, remaining the second-largest in Southeast Asia. GMV is expected to reach around $50 billion in 2025 and has an opportunity to reach approximately $100-$165 billion in 2030. E-commerce continues a positive growth trajectory and remains the key driver of Thailand’s digital economy, representing 61% of total GMV in 2023. The sector grew 10% YoY to $22 billion in GMV.
However, Southeast Asia hasn’t been immune to the shifts in the global economic climate. SEA private funding has declined to its lowest level in six years after record highs. This decline trend is typical across all SEA countries and also in Thailand, where private funding in H1 2023 returned to more typical levels after a spike in the past few years. To attract investment, businesses must show clear pathways to profitability and prove to investors that they offer viable exit pathways.
Remarkably, Thailand’s online travel sector is the second-fastest growing in SEA with 85% YoY growth, and the main growth driver for the country’s digital economy in 2023. The sector is set to reach $5 billion in GMV but has yet to return to pre-pandemic levels at $7 billion in 2019. The country also has the largest subscription video-on-demand market in SEA and is expected to be one of the largest online media markets in the SEA overall between 2023-2030. The online media sector (video-on-demand, music-on-demand, gaming) is projected to reach $5 billion in GMV this year, a 12% increase YoY. Ordering food delivery remains sticky post-pandemic, while commuter demand has returned to pre-pandemic levels. Overall GMV is projected to hit $3 billion in 2023, growing 1% from 2022.
Digital financial services (DFS) in Thailand, which include digital payments, digital lending, digital insurance, and digital wealth, sees strong momentum, with Thailand having the fastest growing digital lending in SEA, at 65%, to reach loan book value of $12 billion in 2023. Digital lending grew the fastest at 65% to reach loan book value of $12 billion in 2023. It is projected that Thailand will be the second-largest DFS market in the region in 2030. Regulators’ focus on supporting underserved communities in Thailand will continue to support further growth in the DFS sector.
High-value users (HVUs) in Thailand - the top 30% of spenders - are forecasted to have a 64% increase in spending over the next 12 months, the highest in the region. HVUs spend more than 7x the amount non-HVUs spend online, especially in discretionary spending verticals such as gaming, transport and travel. HVUs continue to drive sustainable unit economics, but significant growth headroom for Thailand lies in increasing digital participation.
While digital inclusion has made progress in Thailand over the past years, consumers outside of metro areas are at risk of facing a widening digital economic divide when it comes to digital participation. Removing barriers, such as supply and security issues, can improve the participation of non-HVUs and enable the country’s digital economy to reach its growth ambitions.
Keeping the focus on the digital participation gap, especially outside of Bangkok, and resolutely removing barriers to enable more Thais to become active users of digital products and services will help the country unlock further growth in the digital decade. Addressing the gap is the collective responsibility of all digital economy stakeholders. We will continue to deepen our contribution and commitment to the long-term growth of the country's digital economy through initiatives like “Samart Skills”, an exclusive Grow with Google program for Thailand.
Find more insights into Thailand’s digital economy here.
