2019 was a weak year in terms of global economic expansion, and the predictions are that 2020 won’t do much better. The global uncertainties caused by trade disputes and geopolitical tensions will most likely continue to curb economic growth. However, despite all of this negativity, Southeast Asia’s economy is expected to enter into a golden age, fuelled by its digitalisation. In the past few years, Southeast Asia has created a growing internet economy that now has the ability to reach a worth of $300 billion USD by 2025. If the region’s economy continues to expand, it is well on its way to becoming the fourth-largest economic bloc in the world.
The rate of growth experienced in Southeast Asia has broken many expectations and will most likely continue to do so, with expected online industry growth reaching 200% over the next few years. The question is, in a world with such minimal increases over recent years, what has allowed Southeast Asia to be so successful? Their economic growth has primarily been made possible because of an interaction between three significant factors. Southeast Asia has a large, young working population, urbanisation is spreading and, most importantly, technology is booming.
Population growth
Southeast Asia’s population of over 6.5 billion people means that the region makes up 8.58 percent of the total world population, despite only having approximately 3% of the Earth’s total land area. Additionally, more than half of the population are below the age of 35, meaning that the region has a vast workforce. In fact, this youthful presence is considered a “demographic bonus” because of how it sets the area up for success and creates more space for savings, investments, and working productivity.
This “bonus” is an important factor because of the way demographics and economic growth interact. When a country has a large and productive workforce, combined with technological gains, they are much better prepared to be prosperous. As the world continues to become more digitised and automated, Southeast Asia with its young and technologically savvy labourers seem positioned for massive success in this digital revolution.
Urbanisation
Many scholars speculate that urbanisation began in Mesopotamia in the Uruk Period as prosperous and efficient villages attracted the attention of other, less successful settlements. Cities have long been epicentres of success and economic growth, so it’s no wonder that urbanisation is becoming more and more widespread in Southeast Asia. As of 2019, 50 % of the population is urban, and forecasts predict that by 2030 the urban population will grow by another 100 million.
This has led to many correlated developments. However, it’s crucial to note that even with their population growth and the expansion of urban areas, the region would not be as successful as it is without the strength of its current digital economy.
Digitalisation
With a young population comfortable with all forms of technology, Southeast Asia has set itself up to be the global hub of a world that is quickly moving into more eCommerce. Many Southeast Asians spend a daily average of four hours on their smart mobile phones, which is significantly longer than people in other parts of the world. The expansion of internet access and usage allows people to enjoy a higher degree of connectivity, which in turn has created a great demand for a new digital economy.
In this internet economy, consumers can enjoy a more convenient, digital lifestyle. These developments have created a desire for new technology-based markets that will continue to grow and be popular in the future. As a result of creating these markets, the region has guaranteed itself a source of economic growth for many years to come.
Southeast Asia: Primed for success
The economy will always have its ups and downs, and as we move into the future, there’s no way to predict exactly what will happen, but there are always indicators along the way. The combination of Southeast Asia’s demographics along with its urbanisation and digitalisation has the region primed for success.
Throughout the world, there is a high demand for the newest technology, fostered by the taste of the conveniences afforded to us through it. Technology is invaluable to us at this time, and there is a high level of interest in supporting and further developing the world’s digital economy. As the rest of the world continues to go through economic stagnation, the Southeast Asia region has the potential to enter a technology-fuelled golden age that will benefit everyone.