Monday, October 25, 2010

Trends that are shaping the World – part 2

The second of the seven megatrends that I will discuss in this blog over the next six weeks or so is the growth in personal wealth, particularly in emerging economies. Over the last decade, there have already been substantial increases in people’s personal wealth, a result of economic development, discussed in last week’s blog. Since 1990, Gross National Income (GNI) in China and India has grown 768% and 275% respectively versus 104% in the US. As a result, there has been a decline in the number of people deemed to be living in poverty as well as the development of middle classes in emerging economies. This looks set to continue over the next 10 to 15 years and at a greater pace.
There are several drivers behind this trend. The first is the increasing workforce and the shift away from Agriculture towards the higher value added Industrial and Service sectors. This has and will continue to drive significant increases in average salaries in emerging economies. The third aspect is the changing demographics and the change in family structures. The average household size is decreasing as is the number of dependant’s per income earner.
These three factors combine to drive higher levels of disposable income. The consequence to this will be an increased demand for goods and services from companies positioned to capture this growth.

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