Bigger, Growing Faster and more EM than projected

July 02, 2018 |Author: Edward Kerschner, CFA | Categories: Chart of the Week, Emerging Markets


Global Middle Class: bigger, growing faster and more emerging markets (EM) than projected. In 2010 seminal work was published by the OECD with a set of projections suggesting that the emerging middle class in developing countries was about to surge.1 New research2 now suggests that there were about 3.2 billion people in the middle class at the end of 2016, 500 million more than previously estimated. Already, about 140 million are joining the middle class annually and this number could rise to 170 million in five years’ time. An overwhelming majority of new entrants into the middle class—88% of the next billion—will live in Asia.

Slow-growing developed market (DM) and fast-growing emerging markets middle class. The global middle-class market is now clearly bifurcated: a slow-growing developed country middle class, and a fast-growing emerging economic middle class—with growth in both instances measured in terms of total population or total spending respectively. Big geographic distributional shifts in the markets are happening, with China and India accounting for an increasing amount of market share, while the European and North American middle class basically stagnates.


 
1 Kharas, “The Emerging Middle Class in Developing Countries,” Organisation for Economic Cooperation and Development (OECD) Development Center, January 2010.
2 Kharas, “The Unprecedented Expansion of the Global Middle Class,” Brookings Institution, February 2017.

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