According to research by the World Data Lab – a social enterprise based in Vienna and funded by the German government, the European Space Agency and UNICEF – 50% of the global population is now living in households considered to be middle class or rich. This widely accepted definition is based on spending power, using a “middle class” benchmark of US$11-110 spent per person per day (in 2011 purchasing power parity).
This is equivalent to 3.8bn people who are living in households with enough discretionary expenditure to be considered “middle class” or “rich”, a development that The Brookings Institution last week called a “global tipping point“. As the chart below shows, the current split between poor / vulnerable and middle class / rich households is now around 50:50 at a global level, but is projected to be a 33:67 split by 2030. Poor households are defined as those spending below US$1.90 per person per day.
What’s largely driving this trend is the rise of Asia, with nearly nine in 10 of the next billion middle-class consumers forecast to be Asian, focused on China, India and South East Asia. World Data Lab projections state that, by 2030, the spending power of the US middle class will remain dominant globally – at about US$16tn – but that China (US$14tn) and India (US$12tn) will not be too far behind.
Kristofer Hamel and Homi Kharas, who compiled the data and research, explained the significance of their findings as follows: “Why does it matter that a middle-class tipping point has been reached and that the middle class is the most rapidly growing segment of the global income distribution? Because the middle class drive demand in the global economy and because the middle class are far more demanding of their governments.”
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