The future of the middle class in emerging markets

The expanding middle class has been a key driver of multinationals’ investment strategies in emerging markets over the past two decades. However, sometime around 2014, the growth story of the middle classes in emerging markets (EM) changed. As the commodity boom faded in the mid-2010s, growth in many major emerging markets slowed sharply. Currency volatility and depreciations also undermined consumer purchasing power in dollar terms. Then came the omni-shocks of the pandemic years, which sent some emerging market middle classes into reverse. Now, as the disruption of the pandemic fades, we ask two key questions: is the middle-class growth story a thing of the past and if not, where are the opportunities?

Our latest whitepaper, “The Future of the Middle Class in Emerging Markets”, compares long-term forecasts for 32 countries, representing 95% of the emerging markets population. Our analysis reveals that:

• The middle class population in emerging markets is set to double over the next decade, expanding from 354 million households in 2024 to 687 million households by 2034.
• China will remain the biggest EM consumer market. By 2034, nearly one out of every two middle-class households in emerging markets will be in China.
• India’s middle-class will more than double in the next five years. However, it’s not China 2.0.
• Outside China and India, the best opportunities for middle-class growth are still in Asia-Pacific. We estimate that the Vietnam’s middle-class will be the fastest growing one among EMs in the next five years.
• In Latin America, while the middle class in Brazil and Mexico may not see rapid growth, they will remain the third and fourth largest among emerging markets by 2029, only behind China and India. In the meantime, Chile, Colombia, and Peru still offer compelling growth stories.
• In Africa, despite macroeconomic challenges, we expect meaningful growth in middle class consumers in major markets, such as South Africa and Egypt over the next five years.

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