e-Conomy SEA 2022: PH digital economy to reach USD20B by end of year

This year’s e-Conomy SEA report titled Through the waves, towards a sea of opportunity projects that the Philippine digital economy is on track to hit USD20B Gross Merchandise Value (GMV) in 2022, after growing at 22% over the past year. By 2025, the local digital economy is projected to reach USD35B GMV, growing at a 20% Compound Annual Growth Rate (CAGR), and possibly will hit USD100 to USD150B GMV by 2030.

The annual report, which combines Google Trends, Temasek insights, and Bain & Company’s analysis in addition to industry sources and expert interviews, spotlights the digital economies of six countries in Southeast Asia (SEA): Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. 

Growing at 17% from the previous year, e-commerce is expected to reach USD14B GMV by 2022 and USD22B GMV by 2025 as it continues to propel the local digital economy. Despite the partial resumption of in-store shopping, e-commerce accounted for 70% of the overall Philippine digital economy.

E-commerce, food delivery, and video-on-demand are the top three digital activities of Filipinos showing an adoption rate of 88%, 69%, and 58% respectively among digital urban users. 

Here are the rest of the key insights into the PH digital economy: 

• Transport and food delivery are projected to reach USD1.9B GMV in 2022 and continue to grow at 29% CAGR to hit USD4B GMV in 2025. Demand growth is normalizing as more people eat out. The gradual return to the office, increase in brick-and-mortar shopping, and the resurgence of tourism are driving recovery from lockdown lows for Transport.
• Travel is back, with 180% YoY growth to hit USD1B GMV in 2022. As recovery to pre-pandemic levels is likely to be gradual, travel is growing at 44% CAGR by 2025 where the sector is expected to reach USD4B GMV.
• Online media which comprises music, video streaming, and online gaming is projected to grow at USD3.1B GMV in 2022, with YoY growth at 17% since the pandemic peak last year. Highest in Southeast Asia, 37% of paying users in the Philippines said that they play online games at least once a week. 
• Digital financial services show sustained growth, with lending and remittance hitting $6 billion this year. Remittance is expected to deliver USD4B in Gross Transaction Value (GTV) at 32% YoY growth. In 2022, digital payments will drive USD75B GTV and keep growing at 18% CAGR to reach USD123B GTV in 2025.

The Philippines will attract more investors over the long term

With the Philippines as the second fastest growing digital economy in SEA (next to Vietnam) in 2022 (at 22% YoY) and between 2022 to 2025 (at 20% CAGR), the country will be a hot investment hub across sectors including digital financial services. 

• The Philippines has the fastest-growing digital investments sector this year in SEA, at a 63% growth rate from 2021 to 2022.  Seventy-three percent (73%) of investors (second highest in SEA after Vietnam) are expecting deal activity to increase in the country’s local digital economy in the period of 2025 to 2030 as compared to the current situation. 
• Digital financial services are soaring high and the sector continues to attract investor interest, capturing 56% of total investor funding in 2022 and raising roughly USD450M in the first half of 2022 alone. Both Filipino unicorns Mynt and Voyager are in the fintech space.  
• Web 3.0 has attracted sizable investor funding raising USD90M in the first half of 2022 with investors bullish on cryptocurrency adoption in the Philippines which is considered one of the fastest growing in the world. 

“The Philippine digital economy remains resilient despite headwinds and continues to provide boundless opportunities as it is projected to reach USD20B GMV by end of the year. This year’s e-Conomy SEA report also suggests that the country will be a leading investment destination with over 70% of investors expecting deal activity to increase in the period of 2025 to 2030. Google is committed to helping the Philippines sustain the growth momentum of its digital economy through local partnerships, programs, and products that aim to improve the lives of Filipinos,” said Bernadette Nacario, country director, Google Philippines.

“The Philippines’ digital economy is one of the more attractive investment hubs in the region. Across internet sectors there remains tremendous whitespace for growth as the ecosystem drives greater digital inclusion in the country, particularly outside of metro areas. We expect growth to come from not only the physical goods and services internet sectors, but also digital financial services across payments, lending, and other Fintech products,” said Willy Chang, associate partner at Bain & Company.

“The seventh edition of the e-Conomy SEA report shows that the digital future of the Philippines is bright as it has the fastest growing digital investments sector this year in the region. The Department of Trade and Industry is committed to digitalizing our MSMEs and working closely with our private sector partners like Google to help reach the full potential of the country’s growing digital economy,” said Alfredo Pascual, Secretary, Department of Trade and Industry.

Read the full report here.