Emerging Markets

Emerging market middle class set to boom

EM consumers to spend more: Economist

Despite recent market turmoil, consumer confidence is climbing in emerging markets, with middle-class consumers looking to spend more cash - a trend that could boost the global economy.

A survey published by Standard Chartered on Monday showed that the majority of consumers across five key emerging markets – Ghana, Kenya, Nigeria, Indonesia and India – saw their personal finances improving over the next five years.

"The number of people who earn between $10 and $100 per day will go from 1.8 billion in 2010 to 4.9 billion in 2030," Madhur Jha, senior global economist at Standard Chartered, told CNBC in a phone interview.

She forecast the expansion in emerging market middle-classes would lead to "the proliferation of demand for consumer durables, but also a lot of services such as education, health and insurance".

Trevor Snapp | Bloomberg | Getty Images

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Key sectors

Making home improvements was the top priority for most of the people surveyed and spending more on consumer goods such as clothing, car and the latest technological goods also ranked highly.

Financial services also stand to benefit from this middle-class boom, as richer consumers look to protect their wealth and pass it on to the next generation, explained Jha.

The majority of respondents in all countries said technology would play a pivotal role in both personal and national economic prospects. Most planned to make increasing use of technology to organise their finances.

Indian and Indonesian consumers have already woven the Internet into their daily activities, especially when it comes to online banking and shopping. But African countries are still trailing behind. In Nigeria – Africa's largest economy – only 6 percent of middle-class consumers use the internet to bank, and 8 percent use it to shop.

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But tapping into the growing demand will not necessarily be easy for global players. According to Jha, multinationals will have to compete with "the development of indigenous brands over the next few years, who will then try to go global".

Furthermore, developed-world companies will have to modify their products to these markets' specificity. "You can't always use the products available in the developed world in these markets" said Jha. Luxury cars, for instance, will have to be modified for local road conditions and regulations.

However, global players' need to tailor their products to emerging markets, and the birth of a new entrepreneurial generation in these countries should lead to "a lot more innovation", concluded Jha.

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