Opportunities and Trends in Emerging Markets Flashcards
How is the middle income class classified?
Population with income between $6000 and $30,000 per annum
How are middle income countries distributed globally?
Diverse group by size/population/income
5 of the world’s 7 bullion people
73% of the world’s poor people live in middle income countries
1/3 global GDP
What to GDP and GNI per capita graphs show since 1960?
People are becoming wealthy, huge rise in GDP since 1960
A few shocks to the rise due to nationalism but trend remains positive
How has the middle class experienced exponential growth and how is it expected to grow?
2016 - 3.2 billion in the global middle class
160 million will join the middle class annually over the next 5 years
How have India and China experienced growth of the middle class?
88% of the next billion entrants into the middle class will be in Asia
By 2030, Asia could represent 2/3 of global MC
Why and how is there stagnation in advanced countries in terms of middle class growth?
MC market in the US, Eurozone and Japan expected to grow at 0.5% p.a compared to 6% in China and India due to Western world already having significant middle class population
What does GINI coefficient measure?
Inequality - lower the ratio = more equal society is
E.g Brazil (2005-2015) 56.3 to 51.3, improvement in inequality
What opportunities does a growing middle income class offer?
- High incomes
- Governments - will be trying to improve infrastructure to attract FDI and business
- Higher tax = infrastructure and development
How much do the middle income class spend p/a and how is this expected to grow?
$35 trillion –> 20.2% of global GDP
Projected to spend $64 trillion by 2030
How are consumption habits due to change?
India set to overtake US by 2030.
Mexico is going to push France out of the top 10 consumers by 2030
Where are some of the most populous urban cities and what does their growth mean?
- Tokyo - 37 million people
- New Delhi - 28 million: due to be most populous city by 2028
- Shanghai - 26 million
- Means there is increased need and investment into infrastructure
How is urban population growth distributed globally?
World - 2% p/a
Africa - 4.1% p/a
Asia - 2.2% p/a
- India, China and Nigeria expected to account for 35% of projected growth of the worlds urban population by 2050
What opportunities does urbanisation in emerging markets offer to firms?
- Real estate: housing/infrastructure
- Concentrated market
- Increased labour force
- Demand for value added goods
- Higher incomes
- Economic growth
- Unemployment/cheap labour
- Education: growth in private schools
How do housing and slum dwellings pose a challenge for governments in emerging countries?
Sub-Saharan Africa has the highest proportion of slum dwellers (65%)
Only 20% of SSA’s population have electricity access
= crime, insecurity, health and sanitation, disease
How is real estate emerging as a high growth market in emerging markets?
Housing shortages e.g India facing urban housing backlog of 18 million housing units, shortfalls in South Asia amount to 38 million
= opportunities for real estate and construction companies
