According to the World Bank’s “$2-$13 per day” expenditure standard, the growth in the emerging market middle class has been enormous the past two decades. Between 1990 and 2005, the total almost doubled, from 1.4 billion to 2.6 billion, rising from one-third of the developing world’s population to one-half.
However, using a much higher hurdle in defining its “global” middle class ($10-$100 per day, or a level that corresponds more closely to a middle class by western standards), only a very small minority of the world’s developing residents would currently be classified as “global” middle class.
In this new research report, the authors predict that continued strong economic growth throughout most of the emerging market economies over the next two decades will quickly change this.
The highlights from this month’s brief include:
- This is history’s third great middle class surge, and this time, it is coming exclusively from the emerging markets;
- China has at least 400 million people on the threshold of becoming globally middle class. It will lead the world in adding people to these ranks over the next 15 years;
- India will replace China as the biggest contributor to the global middle class around 2027;
- Asia, currently home to 28% of the world’s global middle class, is projected to account for two-thirds by 2030;
- In terms of its impact on global economic growth, consumer spending between the emerging and developed market economies is now roughly equal.
The paper also predicts that China’s per capita income has now reached a level that typically corresponds to an acceleration in the growth rate of domestic consumption, and that as a result, Chinese consumer spending as a share of GDP is likely to have reached bottom and will continue rising in the years ahead.
The research also notes that while income inequality has been rising rapidly within most countries, the distribution of global income between countries is rapidly becoming more equal.
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