Philippine digital economy to hit $42 billion this year

By Beatriz Marie D. Cruz, Senior Reporter

THE PHILIPPINE digital economy is expected to hit $42 billion in gross merchandise value this year, fueled by the surge in digital payments and mainstream use of artificial intelligence (AI) technologies, according to a report by Google, Temasek Holdings, and Bain & Company.

In the latest e-Conomy SEA report, the country’s digital economy is projected to grow by an annual 15% this year from $36 billion in 2025. However, this is a tad slower than the 17% annual growth rate recorded in 2025.

The overall digital economy is expected to reach $77 billion in value by 2030 and $157 billion in by 2035, the report added.

“The Philippines’ digital economy continues to show remarkable resilience and momentum as it proves its unstoppable growth once again this year,” Google Philippines Country Manager Precious Palacios said in a statement on Tuesday.

“What is especially exciting is the rapidly growing trust and adoption of AI among Filipinos — with over half of the working population actively using AI tools to streamline work and daily life.”

The country’s digital economy is also expected to be resilient despite geopolitical and macroeconomic headwinds, such as inflationary spikes and higher interest rates, the report said.

“Long-term growth remains highly promising, anchored by significant untapped user potential, advancing financial inclusion, robust structural drivers, and substantial headroom for increased AI adoption across the country.”

The electronic commerce sector is expected to be the biggest contributor to the Philippine digital economy this year at $28 billion, followed by online media platforms at $6 billion, online travel platforms ($4 billion), and mobility and food ($3 billion).

Digital payments will also be a key driver of the digital economy, as it is expected to grow by 23% to $194 billion in gross transaction value this year. This is projected to reach $360 billion by 2030 and $623 billion by 2035.

Digital lending is also expected to grow to $7 billion in loan book balance this year, while digital insurance will likely expand to $110 million in annual premium equivalent and gross written premiums, it added.

According to the report, AI adoption in the Philippines is already at the “mass-market” scale, with 53% of the working population actively using Generative AI (GenAI) platforms.

This is equivalent to 42 million Filipinos using GenAI, which sent 55 billion annual AI queries for this year alone.

About 80% of Filipinos’ AI use is linked to consumer applications, the report said.

Top uses include study, work, health, online shopping, and entertainment purposes.

“Filipinos stand out across Southeast Asia for creative and professional applications: Gemini prompts for customer support content are nearly three times the regional average,” it noted.

The report also noted that one in two Filipino users trust AI more than last year, while seven out of 10 users rely on AI insights for their buying decisions.

However, Filipinos’ GenAI use is the lowest among six Southeast Asian countries, it said. Singapore was the top user in the region at 70%, followed by Malaysia (68%), Vietnam (65%), Thailand (63%), and Indonesia (54%).

This comes as the Philippines recorded the lowest internet penetration rate at 70%, behind the over 90% adoption rates for Malaysia, Singapore, and Thailand, as well as Vietnam (87%) and Indonesia (81%).

Charles Benedict Aquino, a partner at Bain, said the country’s GenAI adoption journey has more headroom to grow.

“The next chapter is about depth, turning what is occasional use today into everyday workflows that will truly benefit Filipino individuals and businesses,” he was quoted as saying.

The digital economy contributed 9.8% to the country’s gross domestic product (GDP) in 2025, the lowest since the Philippine Statistics Authority started compiling the indicator in 2018.

The Department of Information and Communications Technology is targeting to increase the digital economy’s share to GDP to 12.5% by 2028.