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Thursday, October 18, 2012

Middle Class in Emerging Markets Means Growth: Cutting Research

Bloomberg News
October 18, 2012

By Simon Kennedy

A global consumer revolution is set to take off amid an unprecedented expansion of the middle class.

That’s the forecast of Karen Ward and Frederic Neumann, economists at HSBC Holdings Plc. Their analysis is based on the estimate that almost 3 billion people, or more than 40 percent of today’s population, will join the world’s middle class by 2050 -- defined as earning between $3,000 and $15,000 a year.

The majority will be in emerging markets, meaning such economies could make up almost two thirds of worldwide household spending compared with about one-third today, said Ward and Neumann. China, India and Russia are all set to enjoy average gains in real incomes of about 4 percent up to 2050, they said.

Demographics also benefit many emerging markets, given that individuals tend to consume the most between the ages of 16 and 40, they said. Although China’s median age of 35 is not far off the 39 for the U.S. and Europe, the Philippines’ comparable age is 23 and India’s 26.

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