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The Rise of the Middle Class – Asia’s Contribution

The Rise of the Middle Class – Asia’s Contribution
 

We are living in the midst of a revolution that will profoundly change our world. Welcome to a planet dominated by healthy, wealthy, middle class consumers. Our TV Series Asia Rising is committed to bringing global audiences compelling stories of how Asia will change the world in the years ahead. One of the dominant themes is the rise of the middle class and why this could help to build a better world.

The United Nations says the recent in rise in the total number of middle class persons is a historic shift that has not been seen for 150 years. The new middle class consumers in China, India and Brazil have propelled their economies to equal the size of the industrialized G7 countries. By 2050, they should account for nearly half of world output, far surpassing the G7. Clearly tides are shifting and fortunes are changing.

The Brookings Institution estimates that there are 1.8 billion people in the middle class which will grow to 3.2 billion by the end of the decade. And Asia is almost entirely responsible for this growth. Its middle class is forecast to triple to 1.7 billion by 2020.

That’s right, by 2030, Asia will be the home of 3 billion middle class people. It will be 10 times more than North America and five times more than Europe.

There is also substantial growth in the rest of the emerging world. The middle class in Latin America is expected to grow from 181 million to 313 million by 2030, led by Brazil. And in Africa and the Middle East, it is projected to more than double, from 137 million to 341 million.

Clearly we are witnessing a very positive trend that is being lead and encouraged by the rising economies of the East.

The United Nations and the Organization for Economic Co-operation and Development (OECD) defines middle class as being  someone who earns or spends between $10 and $100 per day. At this threshold consumers have disposable income and enough money to purchase things like fridges, or think about buying a car.

As the UN suggests, the growth is being driven by industrialization today, as it was in the past. The industrial revolution of the 19th Century transformed the economies of Britain, the US and Germany. The move from agrarian to industrial societies generated income rises that created the middle class in the West. In a very similar way this is happening now in the East.

Much of the growth in the region is due to China. It is undergoing a re-industrialization process. As the economy was industrialized in 1978 after decades of central planning, it is upgrading its industry, which has hastened the move out of agriculture. This along with the sheer power of having a population of approximately 1.35 billion people, make the country a global financial powerhouse and in order to maintain this decades long growth streak, Chinese officials have been keen to invest and diversify their holding around Asia.

The big question is will it last?  Our gut is yes. In the last 20 years the world has lifted nearly a billion people out of poverty and despite structural weaknesses in economies and debt levels, most Economists assume this trend will continue. The good news is that with rising levels of middle class comes more secure economies, better healthcare and educational opportunities and a higher standard of living.

As Asia Rising’s Host Vikrom Kromadit notes, “With middle class comes security and with security comes a commitment to the environment, to peace and to maintaining a healthy world.” So here’s to the new middle class.

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