The digital economy of Southeast Asia, South Korea, and Japan (SEAKJ) is set to grow rapidly and outpace the US and the European Union, according to a report from market research firm IDC. The new study was sponsored by global payments platform 2C2P and Ant Group.
Spending in SEAKJ’s digital sectors is expected to hit US$914.9 billion in 2027, marking an 82% increase in over five years. In the report, IDC counted ride-hailing, sharing economy services, e-commerce, online travel, as well as online video, media, and gaming as the sectors that make up the digital economy.
The report also delved into the potential of cross-border businesses. IDC estimates that private and public sector efforts will generate an extra US$232.4 billion in cross-border revenue for the SEAKJ economies from 2022 to 2027, driven by e-commerce and tourism spending growth.
Cross-border e-commerce revenue is expected to jump 70% in the next four years, exceeding that of domestic e-commerce. Within the same timeframe, tourism in SEAKJ is projected to skyrocket 334%, adding a substantial US$171.4 billion to the region’s economy.
More consumers are also adopting digital payments methods as ecommerce continues to boom and tourism recovers. These include transactions via e-wallets and buy now, pay later programs.
The most apparent shift in SEAKJ is expected to be in Vietnam. The report estimates a 21% drop in payments made through more traditional methods like cash on delivery and over-the-counter transactions by 2027.
“From global online platforms to small streetside merchants, it is now imperative for businesses to cater to these digital habits,” said Douglas Feagin, senior vice-president of Ant Group.