Live Well and Be Happy

Disclaimer: All articles under EYE on the Market are a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analyses are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of any analysis. Individuals should consult with their personal financial advisors. ©2016 Copyright MK Khoo. All rights reserved. 

The Rise of the Asian Middle-Class

by MK Khoo, 25 Aug 2016

For the past 25 years, Asian countries have experienced a prolonged period of economic growth. In 1990, Asia's share in world Gross Domestic Product (GDP) in real US$ purchasing power parity (PPP) terms was 23.2% and this grew to 38.8% by 20141.

A major contributor to the growing middle-class was China. According to Pew Research, China's middle-income grew six-fold from 32 million in 2001 to 235 million in 20112. Over the same period, Chinese upper-middle income and high income group grew from 4 million to 67 million or 5% of China's population2.

Globally, the middle-class is a strong force in driving consumption and history has shown the equivalent income of US$6,000 per year tends to be the trigger point for accelerated domestic private consumption.

One of the key factors in propelling Asia's economic ascendency was its integration into the global value chains. This inclusion created a virtuous cycle of income growth and productivity gains. In many instances, the inflow of foreign direct investment (FDI) and market opening measures undertaken by governments in Asia helped sustained the economic growth momentum. Other contributing factors such as the upgrading of skills of the labour force through higher education, improvement in infrastructure and urbanisation have elevated living standards and drove consumption.

Favourable demographics in emerging Asia and credit growth are helpful dynamics in the forecast of future consumer trends. Based on a study done by Brookings Institution (see Table 1), the size of the middle-class in the Asia-Pacific will grow from 28% of the world's total in 2009 to 66% in 20303.


Table 1:


The middle class: size & distribution (millions of people)




North America










Central & South America










Sub-Saharan Africa





Middle East & North Africa










Source: Kharas and Gertz “The New Global Middle Class: A cross-over from West to East” Wolfensohn Center for Development at Brookings 2010


In a later report, Brookings projected middle-class consumption in Asia-Pacific (in 2005 PPP US$) will increase from US$4.9 trillion in 2010 to US$32.6 trillion by 20304. This has certainly caused marketers from around the world to sit up.

With higher disposable income and therefore more discretionary spending, the Asian consumers will become a major force in driving demand for consumer electronics - portable devices, durable goods - household electrical, and services - education, recreation, health, food, communication and travel. During the period from 2010-2015, Asia-Pacific consumer electronics demand grew at a pace of 6.5% compound annual growth rate (CAGR) in volume terms and 5% CAGR in sales terms with value of sales exceeding US$303.6 billion in 20155.

Whereas consumers in the West had firmly anchored global consumption post-WWII, the leadership appears to be passing to the Asian consumers since the beginning of the new millennia. China's lead in shifting the growth model from that of export-based to that of domestic-demand based will help unleash the potential of Asia in driving global consumption. Even as China’s economy is seen to be slowing down in recent years, a GDP growth of 6.5% is still expected this year and this will continue to support regional economies that supply raw materials and intermediate goods to China.

ASEAN, with a combined population of over 600 million, is projected by IMF to grow around 4 to 5% per annum. Hence, as long as economic growth remains positive, the continued expansion of the middle-class in the Asian region is not expected to be disrupted in any significant way in the foreseeable future. Asia is still being seen as the engine powering the world economy in the next decade or so.

1. Oxford  Economics Global Economic Databank November 2015
2. Pew Research Center "Where in the World Are the New Middle Classes
3. Kharas and Gertz
4. Homi Kharas, Brookings Institution "The Emerging Middle Class in Developing Countries" June 2011
5. Utku Tansel “Äwakening of the Middle Class Drives Growth in Consumer Electronics in Asia-Pacific" Jan 2016 Euromonitor International


Our Partners

Click on the logo if you are interested to know more about the business and products/services offered by our partners below. Remember to quote promo code: 'AUTUMNLIFE' for special discounts and/or promotions when you make a purchase with any of our partners.

Sign In