Global Middle-Class Grew Faster Than Expected
How Asia is Adding Trillions to Global Consumption
June 30, 2017, Bruno Jacobsen
Last year, the world’s middle class reached a total of 3.2 billion people. That’s almost half of the human population. With about 140 million people joining the middle class annually, and the vast majority of them coming from Asia, how much of global consumption is shifting to the East? A lot. Check out how below.
According to a recent report by the Brookings Institution, the world’s middle class is growing – and fast. The report indicated that today, 140 million people annually enter the status of middle class. In 5 years, this number can go up to 170 million.
The total market size of the middle-class spending accounts today for one-third of the entire global economy. Soon it will account for much more. The world’s middle class is expected to increase to about 5.2 billion in 2030, or 65% of the planet’s population then.
Of the next 1 billion entrants, the report estimates that almost 90% of them will come from Asia, with a majority (78%) coming from India and China.
Will the East cast a big shadow over the West?
It seems so. Below is an astonishing illustration of how much middle-class consumption is the West is expected to decline relative to the East.
While in 2000 the EU and the US were the major contributors to global middle-class consumption, in 2050 Asia will account for approximately 78% of all of it, with China and India accumulating 55% of the share. This is a huge global shift.
What explains it?
Population numbers is of course one of the main factors. China and India have a total combined population of almost 2.7 billion, out of 7.5 billion people on Earth. That is an astounding 36% of Earth’s population in just 2 countries. Include all of Asia, and that’s 4.44 billion, or almost 60% in just one continent.
Another factor is urbanization. In China for example, in 2010, about 49% of the population was urban. And while today it is 56%, it is expected to grow to 75.8% by 2050. With more and more people moving to cities, with higher paying jobs and more opportunities to consume a variety of products or services, it is no wonder that the East will become the focus of many industries around the world.
How are you or your company preparing for this enormous shift in consumption patterns or the rapid growth of the middle class particularly in Asia?
Let us know in the comment section below.