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Note: We thank Martin Hofer for research assistance.By the time we had finished the house tour and admired the quiet beauty of the fir-canopied neighborhood, we sensed that we would follow our hearts from unsafe and increasingly unaffordable East Oakland, CA to the serene hamlet of Port Townsend, WA. But it is only a first step, the tip of a data mountain, which can be disaggregated sub-nationally by age, gender, educational level, and many other relevant characteristics. These projections are a first attempt to provide real-time estimates on which policymakers and businesses can act. It is thus surprising that so much effort is put into fine-tuning data that is often half a decade old instead of pushing harder to provide better estimates for today and tomorrow. Real-time data models that look forward instead of only backward will be critical to help policymakers and business alike. This trend only reverses after about six years, and then growth in Asia will steadily expand the spending power of the average middle class consumer.įigure 2: The next billion middle-class consumers will be 87 percent Asian

Globally, middle-class consumption is about $37 trillion per year, contributing more to global growth than any other element of demand. Shifting to meat and poultry consumption, taking a vacation, and flying to see friends or family are all part of the middle-class experience, as is spending on health, education, and insurance. If you enter the middle class, you have a little extra money to spend beyond basic needs, a toy for a child or maybe even going to a restaurant or the movies. There are just too few rich people in the world-currently around 190 million-to make a living by catering to them alone. Homi Kharas and Wolfgang Fengler Wednesday, October 9, 2019Īlmost any international company that wants to grow its business needs to target the middle class. We want to show that what happens to the middle class is also of high and increasing relevance for business. Figure 1: The world by income group: The action is in the middleĪ lot has been written about the importance of the middle class for social stability and democratic renewal. As people are moving up the income ladder, the group of “near poor” is declining at equal pace (Figure 1). Every second, some five people enter the middle class. Even though some people talk of a declining middle class in the West, the truth is that the global middle class is growing at an unprecedented speed. In fact, the middle class is on track to reach 4 billion by 2021 and 5 billion by 2027, representing 60 percent of the world’s population.

This is now the world’s largest group, which continues to rise rapidly. Today, around 3.3 billion people belong to the global middle class. But over 90 percent of the world’s population is part of the two groups in the middle, where most of the movement between the groups is happening. The global community has made ending extreme poverty by 2030 one of their headline goals.

Policymakers and the media often pay attention to the two extremes: fighting extreme poverty and preserving the glamorous life of the rich. Senior Fellow - Global Economy and Development, Center for Sustainable Development