RESEARCH and advisory company Forrester released its report, Global Digital Economy Forecast, 2023-2028, on Monday (Aug 19) revealing that the digital economy will reach US$16.5 trillion and capture 17 per cent of global GDP by 2028.
The study measures the size and growth of the digital economy across areas such as tech spend, retail and travel e-commerce, and estimates that the digital economy will see 6.9 per cent Compound Annual Growth Rate (CAGR) from 2023 to 2028.
Almost two-thirds of the global digital economy will be powered by the US and China. Online retail and travel sectors will be the principal drivers behind the growth at a CAGR of 9 per cent and 7 per cent, respectively.
Michael O’ Grady, principal forecast analyst at Forrester, said: “The World Economic Forum estimates that more than two-thirds of new-value creation over the next decade could come from digitally-enabled platforms.”
“To nurture the growth of the digital economy, countries must focus on digital businesses, public services, digital skills availability, the growth of R&D (research and development) spend, and tech investments that influence non-digital activities,” he added.
US has captured 42 per cent of global technology spending, while China has the largest share of the digital economy in e-commerce with 39 per cent of retail sales conducted online in 2024. This is estimated to rise to 41 per cent by 2028.
The report also indicated that South Korea spends the largest share of its economy on R&D, with focused investment on areas such as artificial intelligence (AI), semiconductors for AI, 5G and 6G, metaverse and cybersecurity.
On the flip side, digital investment lags in Europe, with average tech spend growth per year from 2024 to 2027 forecasted to reach 83 billion euros, significantly lower than the 125 billion euros (S$120.1 billion) required by the European Commission.
The top six digital economies by size are the US, China, the UK, Japan, Germany, and South Korea.
