The Accelerated Expansion of the Global Middle Class
In the last seven years, since the publication of projections suggesting that the middle class in developing countries was about to surge, four relevant developments have shaped middle-class calculations.
In a recent paper published by Brookings, senior fellow Homi Kharas updated the finding sof his original research. First, a survey of purchasing power parity prices have markedly changed and improved the understanding of relative economic strength. Asian and African countries “were estimated to be far richer, compared to other countries, than previously imagined.”
The second development has been the continued weakness in global economic growth and the hoped-for “green shoots” have not materialized. The third development is the continued improvement of GDP data. Fourth, there have been new surveys that allow permit a better assessment of income distribution.
The new data suggest that the global middle class, estimated at 3.2 billion in 2016, may be larger by some 500 million people, than previous calculations suggested. “Asian households, in particular, are now thought to be much richer, relatively speaking, than before,” said the report.
The global growth of the middle class is proceeding on two tracks. In advanced economies the market has matured and is projected to grow at 0.5 to 1 percent per year. But the middle-class market in emerging economies could register annual growth rates of six percent or more.
Despite weak projections for global growth, the report concludes that middle-class expansion is set to continue. The next decade could see a faster expansion than ever before. “Within a few years,” the report concludes, “based on current forecasts, a majority of the world’s population could have middle-class or rich lifestyles for the first time ever.”