In the latest Google study, the Philippines has been identified as the fastest growing digital economy in Southeast Asia (SEA) for 2024, reaching approximately $31 billion in gross merchandise value (GMV).
The study, conducted in partnership with Temasek and Bain & Company, is part of the 2024 edition of the annual e-Conomy SEA Report, titled “Profits on the Rise: Harnessing SEA’s Advantage.”
This year, Google also collaborated with Visa, Cube Asia, Tubular Labs, and other industry experts to analyze the six countries in SEA.
The study highlighted six key factors contributing to the rise of the digital economy in the Philippines:
- E-commerce: A significant driver is the emergence of video commerce, which accounts for 20% of the total $21 billion GMV for e-commerce in the country. This sector includes business conducted through brand creators, video influencers, and sponsored content, as well as consumer behavior in researching items before making a purchase.
- Digital Financial Services (DFS): Supporting the e-commerce environment, DFS encompasses digital payments, lending, wealth management, and insurance. Filipinos’ preference for online transactions has propelled the Philippines to the top position in SEA, achieving a 22% share of the market and reaching $125 billion in Gross Transaction Value (GTV).
- Online Media: This category includes video and music streaming services and gaming. The sector has seen a 12% increase from 2023, supported by a surge in advertisement campaigns, and is projected to reach $4 billion GMV this year.
- Online Travel: Following the pandemic, Filipinos are eager to travel, leading to a 13% increase in this sector from the previous year, with projections of reaching $3 billion GMV.
- Online Transport and Delivery: The Philippines has experienced a 13% growth rate in this area, closely following Indonesia, with expectations of reaching $3 billion. Although growth has started to plateau due to the reopening of restaurants and a rising desire among Filipinos to dine out, demand remains strong.
Despite these improvements, report noted that the Philippines still lags in terms of investment. Approximately 60% of investors favor the country, expecting an increase in local funding activities, but it still trails behind Singapore and Indonesia (65%) and Vietnam (80%).
Efforts are being made to remedy this through improved exit environments in SEA, greater regional cooperation and integration, and capital market enhancements, the report observed.
Additionally, digital fluency and AI adoption are on the rise in SEA, which could contribute to the growth of the digital economy. The Philippines leads in this area, showing a 23% increase in interest in AI technology, significantly higher than the SEA average of 11%.
This interest places the country among the top 10 globally in searches related to AI, with enthusiasm for the technology spread throughout the country, not just in Metro Manila.
Mary Jean Pacheco, undersecretary for Digital Philippines at the Department of Trade and Industry (DTI), said during that event that the study reaffirmed the effectiveness of the government’s digital economy strategies.
“The country’s whole-of-government approach fosters economic growth, drives innovation, and ultimately improves the lives of all Filipinos,” Pacheco said.
