- Article
- Global Investment Research
- Demographics
- Future consumer
The next generation of spenders
The coming upper-income boom.
Over the next 25 years, the global economy is set to have 1.2 billion more middle- and upper-income consumers. We expect the upper-income group to make the greatest contribution to consumer spending growth, particularly in Asia – with recreation spending the key beneficiary.
This has been a decade with (so far) a global pandemic, followed by a big surge in inflation, supply chain disruptions, and geopolitical volatility. Yet, throughout all of these adverse shocks, consumer spending has remained impressively resilient.
The resilience hasn’t been evenly spread. Particularly in the last couple of years, it’s the highest income, wealthiest consumers who have been really driving consumer spending growth – both in the US and globally.
But who will drive the consumer spending of the future? In our new report, we zoom out over a long time horizon and examine the structural trends – demographics, and consumer spending behaviour – that could reshape the balance of the global consumer over the next few decades.
We have generated estimates across more than 140 economies, representing more than 95% of the world population, about: the number of new consumers we will see in different income brackets in the coming years and decades; where these consumers will live, and where the biggest areas of consumer spending growth will be.
Our income brackets cover lower-income (less than USD20 per person, per day), emerging (USD20-50pppd), aspirational (USD50-110pppd), established (USD110-200pppd), and higher (more than USD200pppd) categories. These are based on purchasing power parity exchange rates, which also account for the differing costs of living across economies.
The key takeaways? We expect the total middle- and upper-income population to grow by 1.2 billion between now and 2050.
Economies we currently call emerging markets play a pivotal role. Asia is set to account for more than three-quarters of this growth, with India alone accounting for close to 50%. Africa, meanwhile, should account for 23% of the growth in middle-income consumers (though skewed to the lower-middle end).
Ageing demographics mean Europe, North America and Oceania are projected to see a fall in their overall working-age populations – but the movement of consumers up the income distribution means their upper-income population is nonetheless set to rise 75%.
Across the world, our modelling points to global real consumer spending growing by roughly 2.4% per year out to 2050. Asia is set to be the greatest regional contributor to the global figure, with annual consumer spending growth of 3.4%.
In terms of sectors, we expect recreation to be the greatest beneficiary, with spending rising by 3.0% a year (4.0% within upper-income consumers). As an economy becomes richer, the share of income spent by consumers on basic subsistence goods like food falls, while the share spent on discretionary spending categories rises – including “fun” purchases, from travel to live sports and music, cinema, and dining out.
In sum, then, the coming decades suggest a shift not only in the geographic distribution of consumer spending, but also in the sectors that stand to leverage this growth. Understanding these trends could be key to spotting long-term opportunities in the years ahead.
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The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Bethan Ellis and James Pomeroy
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