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The Top Five Cities for Consumer Expenditure Growth in 2018 Held in Asia

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Cities in the Asia Pacific region will lead growth in total consumer expenditure in 2018, with Hefei and Shanghai (both in China), Karachi (Pakistan), Ashgabat (Turkmenistan) and Ho Chi Minh City (Vietnam) taking the top five spots in terms of total consumer market growth. This trend will reflect the expected comparatively strong economic performance of the Asia Pacific region (which is forecast to register real GDP growth of 5.5% in 2018, the highest of any region), as well as anticipated robust growth in these cities’ host economies. Overall, out of the 50 top-growing cities in 2018 (in terms of consumer expenditure), 47 are located in the Asia Pacific region, making the search for the best-performing consumer markets almost exclusively an “Asian Affair”.

Hefei: Robust investment in services will keep driving growth

While the expansion of the Chinese economy is expected to decelerate in 2018, as the government shifts its focus from manufacturing to value-added services, the country will remain amongst the world’s fastest growing economies. This will continue to support growth in consumer expenditure in the country’s metropolitan hubs. Hefei is a prime example of this shift in Chinese government policy. Backed by considerable investment in research, technology and education, the city has undergone extraordinary development. This has resulted in Hefei’s in average real GDP growth of 14.2% over 2012-2017 (compared to 7.2% for China as a whole).

Source: Euromonitor International 

Shanghai: City will benefit from faster global economic growth

Shanghai, China’s leading economic and financial centre, will continue to enjoy strong expansion during 2018. Despite the expected deceleration of China’s GDP growth, Shanghai’s strong links to the global economy (due to significant trade and foreign direct investment) mean it will benefit from an anticipated rise in global growth in 2018. This trend will keep supporting the expansion of Shanghai’s total consumer market, valued at USD188 billion (roughly the size of New Zealand’s economy) in 2017. The increase will be mainly driven by a marked rise in Shanghai’s per capita consumer expenditure (which stood at USD7,514 in 2017, one of the highest in China).

Source: Euromonitor International

Karachi: Demographics are supporting consumer expenditure growth

Pakistan’s continued economic expansion, fuelled by government fiscal and monetary stimulus, will remain supportive of growth in consumer expenditure in Karachi in 2018. Nevertheless, what sets Karachi apart from other top-growing cities is the key role of demographics in the increase of its consumer market. Between 2012 and 2017, Karachi’s total population rose by 22% (the strongest-growing amongst the world’s largest 30 cities) to reach 23.9 million by the end of that period. A large and fast-increasing population generates opportunities for companies to capture a share of spending of the city’s growing number of consumers.

Source: Euromonitor International

Ashgabat: Growth will remain driven by considerable public spending

Backed by the expected stabilisation of global energy prices and continued government stimulus, Turkmenistan’s economy is forecast to register sustained robust growth in 2018. This, combined with expected lower inflation, is set to support a marked rise in total consumer expenditure (in real terms) in the capital city, Ashgabat. Much of Ashgabat’s growth in household disposable income and spending is driven by large levels of government expenditure (including salaries for the city’s large civil service sector) and public investment. These factors have contributed to make of Ashgabat one of the world’s strongest growing consumer markets over 2012-2017.

Source: Euromonitor International

Ho Chi Minh City: Exports-driven growth set to accelerate

The anticipated improvement in global economic growth in 2018 is set to benefit Vietnam’s exportsdriven economy. Capitalising on its labour cost advantage, the country has attracted significant levels of FDI for exports-oriented manufacturing activities, which make Vietnam’s economy highly sensitive to trends in global demand. Ho Chi Minh City has been one of the main recipients of FDI in Vietnam over the long run. As a result, the city’s total exports as a percentage of GDP reached 64.8% in 2017 (the highest amongst the world’s top-growing cities), generating valuable foreign exchange inflows that have backed the expansion of Ho Chi Minh City’s consumer market.

Source: Euromonitor International

While companies investing in these cities will benefit from rapid growth, special attention should be paid to consumer market segmentation, spending trends and evolution of lifestyles in each of these cities, in order to take full advantage of the opportunities presented.

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