Will Asia’s Consumers Be A Force in the Global Economy?

The short answer is Yes! Over the last two decades, global poverty has dropped dramatically. About 1.2 billion people have been propelled into the consuming class, i.e. an income level at which they can make significant discretionary purchases. This is according to McKinsey Global Institute’s report. By 2030, more than half of global consumption growth will be from Asia.

The Asian middle class will be 3 billion strong. South-east Asia will have 163 million households in this consuming class by 2030. The highest impact will emerge from Indonesia.

The Asian region is one of the most important markets for international companies. Asians have long had a preference for foreign luxury goods and brands. But this is changing. The post ‘90s generation is starting to lose bias against domestic brands – they are starting to choose local brands over foreign ones.

The most striking consumption has occurred in China. Growing wealth in China has created an affluent class of aspirational consumers accounted for one-third of global spending on luxury goods and McKinsey anticipates this will double by 2025.

Exhibit 1

Not only growth but dynamic changes as new consumers move past basic purchases to new brand loyalties and indulgences that express their fashion and style. Companies need to meet ever-high expectations which will set trends for the rest of the world.

Reference:

Asia’s future is now, McKinsey Global Institute, July 2019