Income and Expenditure in Asia Pacific

October 2021

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.

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Key Findings

Disposable income to increase rapidly through to 2040

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.

Asia Pacific to become the largest consumer market globally

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.

Huge inequalities are set to persist in the future

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.

Education and health goods and medical services to witness the fastest growth

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 to remain the largest market across household types

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.

Introduction

Scope
Key findings

Regional Overview

Income will grow rapidly but will still lag behind other regions
The highest savings ratio globally due to a desire for security
Asia Pacific countries struggle to close the gender pay gap
Consumer expenditure to rise but will remain below global average

Regional Consumer Expenditure

Spending on essentials to remain high due to rising prices
Expenditure on transport and education to rise at the fastest pace
Spending power remains limited for many regional households
The need for family-orientated goods and services to remain high

Regional Distribution of Income

Middle aged consumers shape demand for higher value products
The lowest income class to remain predominant as poverty rises
The majority of regional consumers to seek budget products
Income inequality to increase in many Asia Pacific countries
Urban-rural inequality to persist due to unequal access

Country Snapshots

Azerbaijan: Share of income and wealth of the middle segment
Azerbaijan: Middle-income households
Azerbaijan: Essential spending by middle-income households
China: Share of income and wealth of the middle segment
China: Middle-income households
China: Essential spending by middle-income households
Hong Kong: Share of income and wealth of the middle segment
Hong Kong: Middle-income households
Hong Kong: Essential spending by middle-income households
India: Share of income and wealth of the middle segment
India: Middle-income households
India: Essential spending by middle-income households
Indonesia: Share of income and wealth of the middle segment
Indonesia: Middle-income households
Indonesia: Essential spending by middle-income households
Japan: Share of income and wealth of the middle segment
Japan: Middle-income households
Japan: Essential spending by middle-income households
Kazakhstan: Share of income and wealth of the middle segment
Kazakhstan: Middle-income households
Kazakhstan: Essential spending by middle-income households
Malaysia: Share of income and wealth of the middle segment
Malaysia: Middle-income households
Malaysia: Essential spending by middle-income households
Pakistan: Share of income and wealth of the middle segment
Pakistan: Middle-income households
Pakistan: Essential spending by middle-income households
Philippines: Share of income and wealth of the middle segment
Philippines: Middle-income households
Philippines: Essential spending by middle-income households
Singapore: Share of income and wealth of the middle segment
Singapore: Middle-income households
Singapore: Essential spending by middle-income households
South Korea: Share of income and wealth of the middle segment
South Korea: Middle-income households
South Korea: Essential spending by middle-income households
Taiwan: Share of income and wealth of the middle segment
Taiwan: Middle-income households
Taiwan: Essential spending by middle-income households
Thailand: Share of income and wealth of the middle segment
Thailand: Middle-income households
Thailand: Essential spending by middle-income households
Uzbekistan: Share of income and wealth of the middle segment
Uzbekistan: Middle-income households
Uzbekistan: Essential spending by middle-income households
Vietnam: Share of income and wealth of the middle segment
Vietnam: Middle-income households
Vietnam: Essential spending by middle-income households
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