As global businesses continue to face uncertainty and challenges posed by the Coronavirus (COVID-19) pandemic, insights into global income and expenditure trends are critical in corporate strategy planning, as they help businesses predict the purchasing power potential and spending patterns of different consumer segments, and thereby identify opportunities.
Income inequality is expected to worsen (or at least not improve) in the period to 2040 in 72 out of the 103 key economies that Euromonitor International tracks. This requires companies to strategise for increasingly polarised consumer markets.
In the context of rising income inequality and economic uncertainty, the expansion of the middle class is set to slow in many countries over the medium term. In effect, this increases the importance of low-income consumers at the bottom of the pyramid.
Global consumer expenditure on hotels and catering fell by 21% year-on-year in real terms in 2020, as a result of lockdowns and travel restrictions. Over the period to 2040, however, global consumer spending on this category is set to rise by 98% in real terms. This strong rebound is due largely to pent-up demand, but is also a reflection of the “middle class reset”, in which middle class consumers are shifting away from the accumulation of material things and towards “experiences”.
As a result of population ageing, the global population aged 65+ years is expanding, thus they are an increasingly important consumer segment. Additionally, this cohort is in good financial health, as a result of the lifelong accumulation of wealth and multiple income sources.
In 2026, Asia Pacific is expected to overtake North America to become the biggest region by total consumer expenditure. China, India, Japan and Indonesia will feature among the world’s top 10 largest markets in 2040.
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