This year’s e-Conomy SEA report titled Reaching new heights: Navigating the path to profitable growth projects that the Philippine digital economy is on track to hit $24B Gross Merchandise Value (GMV) in 2023. By next year, it’s set to continue its double-digit climb towards $35B GMV, making the Philippines one of the fastest-growing digital economies in Southeast Asia (SEA).

The Philippine digital economy is on fire

The annual report, which combines Google Trends, Temasek insights, and Bain & Company analysis, as well as industry sources and expert interviews, spotlights the digital economies of six countries in SEA: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

Accounting for 70% of the overall online activities, E-commerce remains the main growth driver of the Philippine digital economy. This is followed by Online Media which is set to reach $5B and Online Travel which is expected to grow to $4B by 2025.

Transport and Food Delivery

Both are projected to reach $2B GMV in 2023 and continue to grow at 19% CAGR to hit $3B GMV in 2025. The momentum in mobility–which includes return to office, travel, eating out, and brick-and-mortar shopping–contributes to Transport’s growth.

Looking into Digital Payments

This continues to gain traction and is set to hit $93B this year and $126B by 2025. E-wallet and account-to-account (A2A) payment rails will see the fastest growth due to lower costs to merchants. Informal A2A payments are expected to grow in merchant adoption as they look to sidestep formal registration of business accounts with digital payment providers.

The role of AI in driving profitable growth

Enhancing operational efficiency and improving user experience will be key for companies to achieve profitable growth — and AI can help achieve this. It can bring a lot of value in areas such as inventory management and increase deeper engagement through personalized content recommendations in online media. AI can also play an important role in detecting and preventing fraud, increasing consumer and merchant security.

As part of its efforts to help the country build a Digital Philippines with AI, Google has launched generative AI skilling courses available at no cost under its Cloud Skills Boost Program to make career paths in AI more accessible. Through the Google for AI Startups Cloud Program, Google is also supporting more seed to early-stage startups (Series A startups) who use AI as the core technology to develop products or solutions.

Read the full e-Conomy SEA report here.