In the next 20 years, the global “middle class” is estimated to grow by a staggering three billion and that three billion will come almost solely from developing markets, states a new study by Ernst & Young.
“Middle class” is a broad term, steeped in different social, economic, and cultural connotations depending on the culture in which you live. There is a surprisingly wide range of income brackets currently used for this purpose. For instance, the World Bank uses the range $2–$13 USD per day,” states the survey
By this optimistic calculation, millions of people worldwide now occupy the middle class who recently did not. However, as promising as these numbers seem, an income of $2-$13 daily does not put an individual into the income bracket that typically enjoys creature comforts such as televisions, washing machines, and reasonably good healthcare that many in countries with a long history of economic growth may take for granted.
Therefore, this newly minted middle class occupies a precarious position and could at any time slip back to abject poverty if economic growth were to reverse or even stall. According to EY, a more apt definition of global middle class is limited to people earning $10-100 a day, who have more disposable income for automobiles and other luxuries.
At $10 a day and up, more people start to move into the “sweet spot” that occurs when millions are pulled out of poverty and start to catch the attention of companies that have traditionally served middle class consumers in higher income nations. Besides the economic factors, certain cultural questions will arise as multinational businesses hone in on newly emerging markets. While learning to supply the demands of their new customers, global businesses will obviously also need to navigate the challenges of selling across cultures.
How does your country define middle class? What does a middle class income provide where you live and how has this changed over the years? Do you believe that the future will see less poverty for people around the world or will things only get more challenging?
