Digital development is likely to be scaled up in Southeast Asia this year, defying a global economic slowdown and the headwinds of monetary tightening, says London-based think tank Asia House.
In its Annual Outlook 2023 report, the think tank predicted the Asian economy is likely to prove resilient if investment and financial flows are directed to digital and green innovation to underpin sustainable growth and investment.
A resilient Asia will drive global economic growth in 2023, despite the obstacles of monetary tightening and weak global growth, noted the report.
"Our outlook indicates Asia's growth prospects continue to hinge on an acceleration in digital transformation, greater regional coordination and striking the right balance in broader monetary policy across the region," said Phyllis Papadavid, director of research and advisory.
Thailand's digital economy was estimated to post 17% growth year-on-year in 2022 to 1.28 trillion baht, largely boosted by e-commerce.
Last year, Thailand's Digital Financial Services platform saw double-digit growth across all sectors, including payments, remittances, lending, investment and insurance. It accounted for the highest share of investor funding in Thailand, with more than US$150 million raised during the first half of 2022 alone.
Digital development also shows growth in the Philippines, the report found. Digitalisation, especially e-commerce, is projected to be essential to the Philippines' economic development.
The country's online economy is growing and expected to reach $35 billion by 2025.
The Philippines is a major adopter of blockchain technology in Southeast Asia, second only to Vietnam, where the digital economy, particularly in banking and e-commerce, is being deepened through the application of artificial intelligence among small and medium-sized enterprises including startups.
The report said Indonesia is well positioned as an emergent regional tech hub, despite a digital penetration rate below its neighbouring countries and developed economies.
The Indonesian internet economy is expected to be worth $146 billion by 2025.
The adoption of cashless transactions, including debit cards and electronic money, has also experienced rapid growth.
The digitalisation outlook is less bullish for China and India this year because of lags in Industry 4.0 development, according to the report.
Aside from digital development, Asia House suggested greater regional coordination in Asia is necessary to increase economic integration further, particularly in the form of expanded economic zones and investment corridors.
"Prioritising economic readiness for both climate change and digitalisation, and the policies that link the two, will be essential for Asia's higher growth trajectory," said Ms Papadavid.