Asia Pacific is projected to witness the fastest growth in disposable income and consumer expenditure globally over 2021-2040, due to rapid economic development, ongoing urbanisation and digitalisation. However, huge income disparities and rising poverty levels could hamper growth. Moreover, the global pandemic has contributed to rising inequality and an increasing gender pay gap, as well as the expansion of the lowest income class. A global economic slowdown could hinder consumption growth.
Disposable income levels per household remained the second lowest globally in 2019. Nevertheless, total disposable income in Asia Pacific is forecast to witness the fastest rate of expansion over 2019-2040. At the same time, the savings ratio is the highest globally, surpassing 25% of disposable income. Consumers aged 35-49 are set to remain prevalent in the high-income group.
Although expenditure per household in Asia Pacific is among the lowest globally, it is projected to surge through to 2040. Improving living standards, rapidly expanding middle class, favourable lending conditions and structural reforms are anticipated to continuously drive private consumption. However, the lower income classes are set to remain dominant, hampering discretionary spending growth.
Large income inequality remains a key challenge in Asia Pacific. Regional disparities continue to increase, as economic development is largely focused on urban areas. In addition, the gender gap is expected to widen, as many women face major barriers to economic and political advancement.
These are the best-performing spending categories through to 2040, as a result of surging tuition fees and the rising popularity of private education as well as rapidly ageing population and increasing healthcare costs.
Couple with children will remain the dominant consumer market across household types in Asia Pacific by 2040. However, its share of total spending is expected to shrink due to rapidly rising single-person households and couple without children.
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