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Asia's expanding middle class presents huge opportunity for region, world: ADB | Developing Asia's rapidly expanding middle class is likely to assume the traditional role of the US and Europe as primary global consumers and help rebalance the global economy, says a new report on Asia's middle class from the Asian Development Bank (ADB). The report, published
in a special chapter of Key Indicators for Asia and the Pacific 2010, the flagship
annual statistical publication of the ADB, found that Asia's consumers spent an
estimated 4.3 trillion dollars (in 2005 purchasing power parity dollars), or about
one-third of OECD consumption expenditure, in 2008 and by 2030 will likely spend
32 trillion dollars, comprising about 43 percent of the worldwide consumption.
The special chapter, titled "The Rise of Asia's Middle Class", examines the rapid
growth of Asia 's middle class, how the poor advance to the middle class, factors
that characterize the middle class, and pathways through which they become effective
contributors to growth and poverty reduction in the region. "Developing Asia 's
middle class is rapidly increasing its size and purchasing power, and will be
an increasingly important force in global economic rebalancing," said ADB Chief
Economist Jong-Wha Lee. "Even though the Asian middle class has significantly
lower income and spending relative to the Western middle class, its growth in
expenditures has been remarkable and its absolute levels are commanding." Strong
economic growth in Asia over the past two decades has been accompanied by significant
reductions in poverty as previously poor households have moved into the middle
class. Defining the middle class in Asia as those consuming between 2 and 20 dollars
per day, the report found that in 2008, Asia 's middle class had risen to 56 percent
of the population-or nearly 1.9 billion people-up from 21 percent in 1990. The
middle class of the People's Republic of China (PRC) is currently larger than
all others in absolute size, having added 800 million people to its ranks between
1990-2008. In the same period, spending in Asia increased almost three fold, compared
to marginal increases in all other regions, including developed countries. As
a result, consumption expenditures by developing Asia are now second only to developed
countries. The report stresses that a great number of Asia 's new middle class
individuals still get by on incomes just above poverty levels, leaving them vulnerable
to a relapse into poverty. At the same time, the emergence of so much new spending
power carries with it a host of new environmental and health concerns that until
recently were more typical of wealthier parts of Asia and the world. "Clearly,
policies are needed that both bolster the new status of the middle class and deal
with its adverse consequences; policies that encourage the creation of and access
to more well-paid jobs and more advanced education and health care to help prevent
slippage back into poverty, and that mitigate additional environmental constraints
and health concerns," said Dr. Lee. Yet, in balance, expectations are that Asia
's middle class, through its sheer size and dynamism, will present a huge opportunity
for the region and for the world. The report projects that by 2030 much of developing
Asia will have attained middle class and upper class majorities, with the PRC
and India expected to provide the largest number of new middle class. With the
appropriate middle-class friendly policies, the report says, Asia will be able
to move away from export-led to domestic-led consumption growth and reduce its
exposure to negative external shocks, such as the 2008 global financial crisis,
which began in the US . In turn, it will also help correct the global imbalances
that contributed to the financial crisis. |
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