India and Asia Economic Insights future

1. Asia as the driver of growth

The good news is that Asia will continue to be the driving force in world economic growth.
In 2014, China became the worlds largest economy in purchasing power parity (PPP) terms,
overtaking the United States for the first time in history. The ADB forecasts that Asias per
capita income could rise six-fold in PPP terms to reach Europes levels by 2050. Overall, the
emerging Asian economies are expected to grow by 6.9 percent per year from 2014 to 2018.
Underpinning economic growth in Asia is not only the rise in domestic demand, particularly
for middle-income countries such as Thailand and Malaysia, but also an increase in foreign
investment in less developed countries such as Cambodia, Laos, Myanmar, and Vietnam.

Indias economy to become the third largest behind the US and China in
2030, jumping from the 10th largest economy today
India's projected GDP in 2030 was $10,133 billion, behind America's $32,996 billion and China at the top
with a projected GDP of $34,338 billion.
However, India will become the largest economy in the Commonwealth in 2019 when its economy
overtakes the British economy.

Read Entirely: Future of India: The Winning Leap

Read Entirely: Middle class growth in emerging markets
http://www.ey.com/GL/en/Issues/Driving-growth/Middle-class-growth-inemerging-markets

Historically, the establishment of the middle class is when consumption levels begin
to grow exponentially. The worldwide middle class comprised only 1.8 billion people
in 2009, but that number is expected to expand to 3.2 billion by 2020 and to hit 4.9
billion 10 years after that. Those are impressive numbers, and 85 percent of that
growth is expected to come from Asian countries, initially led by China but with
India hot on its heels.[3]
In 2000, the middle class in India accounted for less than 1 percent of the global
middle class. Ten years later that figure had about doubled, but was still less than 2
percent. However, by 2020, India is projected to account for 10 percent of the

worlds middle class and then to jump to 12 percent a year later, surpassing the U.S.
By 2024, Indias middle class will overtake Chinas as the worlds largest with 16
percent of the total global middle class population.[4] This growth is due in part to
excellent demographics a young population that is growing rapidly.[5]

Indias total household consumption is expected to multiply four times in just

two decades, between 2005 to 2025, according to the McKinsey Global
Institute. By its estimates, the countrys middle class will be 583 million strong
by 2025, making India the worlds fifth-largest consumer market. By
more optimistic projections, like one by the World Bank economist Ejaz
Ghani, India will have more than a billion middle-class citizens by 2025 that
is about two-thirds of its estimated 2025 population.

Growth in wealth creation by the middle class in India has outpaced the global
average, but lags far behind the rate of expansion in China.
In India, middle-class wealth has grown 150% since 2000. Globally, it has doubled,
according to the Global Wealth Report 2015 by Credit Suisse AG. Chinas middleclass wealth grew a staggering 330% in the same period.
Global middle-class wealth is estimated at $80.7 trillion, as against $44.4 trillion in
2000.

For the long-term period through to 2030, Euromonitor International has

identified five emerging markets with the best middle class potential, which
are China, India,Indonesia, Nigeria, and the Philippines. In these countries,
the middle class is set to become a prominent consumer force thanks not only
to their large size, but also their strong income growth prospects and a median
income exceeding US$10,000 (in constant 2014 prices) per household in
2030.
Source: Euromonitor International from national statistics

Note: Data are forecast. The size of the bubbles indicates the size of the middle class in
2030.

1. CHINA: SET TO REMAIN THE WORLDS LARGEST

MIDDLE CLASS BY 2030
Despite its slowing economy, China remains a potent lure for multinationals and there
will be plenty of opportunities for businesses looking to target the countrys middle class
consumers with rapidly rising purchasing power. In 2014, the number of middle class
households defined as those with between 75.0% and 125% of median income stood
at 112 million, which made Chinas middle class the worlds largest. By 2030, the
Chinese middle class is expected to keep its top rank, as it will swell to 137 million
households.
What is more, China is expected to enjoy robust median income gain over the long term.
Euromonitor International forecasts that during the 2015-2030 period, the median
disposable income in China will grow by 89.0% in real terms to reach US$19,709 (in
constant 2014 prices) per household an income which will give Chinese middle class
households significant capacity for discretionary spending.

2. INDIA: ROBUST INCOME GAINS AND SOLID

MIDDLE CLASS EXPANSION
India is projected to be among the top five countries with the fastest real gains in
median income (with the other four being the far smaller economies of Turkmenistan,
Uzbekistan, Georgia and Lithuania). Over the 2015-2030 period, the Indian median
income per household is set to increase by 89.8% in real terms to reach US$10,073 (in
constant 2014 prices) by the end of that period. This level of median income will not
only give the Indian middle class a discretionary spending power, but will also help to
transform the countrys consumer market from a bottom of the pyramid market
towards a middle class consumer market with greater and more sophisticated demand.

By 2030, the number of middle class households in India will exceed 90 million (up
from 74 million in 2014), which means that India will keep its current rank as the
worlds second largest middle class. However, the fact that Indias middle class of 2030
will remain smaller than that of China in 2014 suggests that there will still be
considerable room for the Indian middle class to grow and the need to improve the
distribution of income in India.

The fact that Nigeria has the largest population, economy and consumer
market in a rising Africa makes the country a prime spot for businesses
seeking to tap into Africas imminent boom in consumer spending. On top of
this, Nigeria is expected to have the worlds second fastest-growing middle
class (behind Guatemala), as the number of middle class households in the
country is set to rise from around 10 million in 2015 to nearly 15 million in
2030.
Euromonitor International forecasts that in the period through to 2030, the
Nigerian middle class will raise their spending the most on communications,
which reflects Nigerias vibrant telecom scene with urban middle class
consumers increasing their 3G and 4G uptake.
"India's current average monthly wage is around 25 times smaller than that of the UK. By 2030,
it is likely to be only 7.5 times smaller," PwC said.
Similarly, at present the average wage in US is 7.5 times more than in Mexico, but the gap could
be less than 4 times by 2030. Over the same period, the average monthly Chinese wages could
rise to around half of that of Spain.
"As an increasing population moves into middle income brackets, aspirations and expectations
from both governments and private enterprise will change, with greater demands for
meritocracy, use of technology in all spheres, transparency and society building." Padmaja
Alaganandan, leader - people and change practice, PwC India, said.