Southeast Asia's internet economy is projected to grow by only 15% in 2024, reaching a total of US$263 billion. This marks a decline from 17% growth in 2023, representing the lowest growth rate since 2017 [b39f7b5e]. The slowdown is attributed to consumers reducing their spending in response to high inflation and rising interest rates, which have put pressure on disposable incomes [b39f7b5e].
In the first half of 2024, private funding for tech companies in the region hit a record low, with only 306 deals completed, a significant drop from 564 deals in the same period in 2023 [b39f7b5e]. Major technology firms, including Amazon, Alibaba, Grab, Sea, and GoTo, are under increasing pressure to demonstrate profitability, with an expected profit of US$11 billion on US$89 billion in revenue [b39f7b5e].
Despite the challenges, tech giants have committed US$30 billion to develop AI-ready data centers in the first half of 2024, indicating a continued investment in technology infrastructure [b39f7b5e]. This investment comes as companies seek to adapt to changing market conditions and consumer behavior, which have been significantly influenced by economic factors [b39f7b5e].
The report detailing these trends was produced by Google, Temasek Holdings, and Bain & Co., highlighting the evolving landscape of Southeast Asia's digital economy amidst broader economic pressures [b39f7b5e]. As the region navigates these challenges, the interplay between consumer spending and technological investment will be crucial for future growth prospects.