The Emerging Markets Consumer
In our latest article the Emerging Markets Team discussed private consumption and its importance as the largest component of most economies, be that developed or emerging.
Of the world’s 7.7 billion people, almost 7 billion live in emerging and frontier countries. Between now and 2030, the United Nations expects them to account for almost all of the additional 800 million, while 90% of the new entrants into middle class status around the world will come from emerging Asia.
Some of these economies are growing rapidly. India’s economy, as measured by wealth per adult, has expanded fourfold in the last 18 years. This is impressive, but pales by comparison to China, where the same metric has increased a staggering 11-fold. Private consumption is the largest component of most economies, usually by some distance. In most cases, the share of consumption rises as they become wealthier, with the move from agriculture to manufacturing and then to services. This pivot towards domestic demand means that these countries are less affected by a slowdown in global trade than would have been the case in the past. As economies develop, consumption patterns will change.
