Asia’s rapidly rising middle class, led by India and China, would be the key to rebalance the global economy, making it more consumption-driven rather than relying heavily on external demand. In its annual statistical report, multilateral lending agency Asian Development Bank (ADB) said Asian consumers were likely to spend $32 trillion by 2030 that would be 43 per cent of the total global consumption.
“Developing Asia’s rapidly expanding middle class is likely to assume the traditional role of the US and Europe as primary global consumers and help rebalance the global economy,” the report said.
China and India have 817 million and 274 million middle class people, respectively.
The report states that developing Asia’s middle class has increased rapidly in size and the purchasing power has also grown proportionately. Strong economic growth has led to reduction in poverty and an increase in the size of middle class. In 2008, middle class constituted around 56 per cent of the Asian population at 1.9 billion people, up from 21 per cent in 1990 along with a three-fold increase in expenditure by the population, says the report.
Between India and China, ADB states India has some advantage in the area of consumer-driven growth as its consumer product companies have innovated marketing strategies to reach out to rural areas, fuelling low-cost products and services. “Indeed, Indian companies are now world leaders in designing and marketing low-priced products and services geared to low-income consumers,” the report stated.
ADB Chief Economist Jong-Wha Lee said Asia’s middle class population was likely to grow to 2.7 billion by 2030 from the current 1.9 billion.
