Singapore sees fast recovery in travel and highest digital penetration across multiple sectors

Photo by Stijn Dijkstra

The 8th edition of the e-Conomy SEA report3 – Reaching new heights: navigating the path to profitable growth, released by Google, Temasek and Bain & Company shows that, despite global macroeconomic headwinds, the region’s gross merchandise value (GMV) continues an upward trajectory and is set to reach $218 billion, growing 11% year-on-year (YoY).

In Singapore, the digital economy is expected to grow by 12% to reach $22 billion this year, and is projected to reach approximately $30 billion in 2025. The GMV growth is largely driven by travel recovery with a 38% increase to $7 billion that reaffirms its status as a regional hub, though e-commerce – its largest digital sector – will continue to provide fuel for growth.

With 100% urbanisation rate, high internet saturation and well-developed physical infrastructure, Singapore has the highest digital penetration in SEA across multiple digital economy sectors including e-commerce, and a higher willingness to spend on digital services such as media.

While 90% of consumer payments are made digitally, there is significant headroom for growth across other financial services such as wealth which remains significantly underpenetrated. It is projected that Singapore will be the biggest digital wealth market in SEA, with an increase from $26 billion in 2023 to approximately $150 billion in 2030. In line with global shifts, private funding continues a steady decline in 2023, from $7.5 billion in H1 2022 to $2.8 billion in H1 2023, though Singapore is still the hottest funding market among the SEA countries.

DFS investment value, in particular, sees a slight increase in H1 2023 to H2 2022 when compared to other sectors like e-commerce. In the long term, Singapore’s GDP growth is expected to remain in the low single digit due to an ageing population and relatively developed economy, but the digital economy is a bright spot with GMV expected to grow faster than GDP from 2023-2030. Priority can be placed on targeting the HVUs of which 53% have increased online spend across verticals3 in the last 12 months, and 54% plan to increase their online spend in the next 12 months.

“Singapore will continue to play a key role in the growth of Southeast Asia’s digital economy, leveraging its status as a business hub. With the digital economy projected to take the front seat in Singapore’s growth, more can be done to support the adoption of digitalisation in businesses, including traditional financial institutions. This will help strengthen consumer confidence and fuel further growth,” said Sapna Chadha, Vice President, Google Southeast Asia.

“As a tech hub and regional gateway for funding and talent, Singapore can play a catalytic role to drive the next phase of growth for Southeast Asia’s digital economy. Singapore’s vibrant ecosystem enables innovation that can spur sustainable growth of the digital economy across the region,” said Fock Wai Hoong, Head, Southeast Asia, Temasek.

“Higher cost of living and the subsequent pullback in spending has resulted in a small speed bump for Singapore’s e-commerce GMV this year. While digital penetration in the sector remains higher than the rest of SEA, some acceleration is needed to meet its growth trajectory of $30 billion by 2025. However, the overall digital economy growth is still expected to outpace GDP growth. Meanwhile, growing affluence and increasing digital familiarity in the Republic has created new opportunities in digital financial services, particularly in wealth management and digital banking. Winning players will tailor their offerings to meet banking priorities and user experience expectations for the emerging middle-class segment,” said Florian Hoppe, Partner and Head of Vector in Asia-Pacific, Bain & Company.