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Friday, October 10, 2003

Let a Billion Wallets Bloom

Again via Rajesh the Economist has a piece on Asia's new consumers. Note the importance attached to the changing demographic. The idea is spreading!

All across Asia, consumers are waking up and finding their voices, or at least their wallets. They are younger than their counterparts in the West. They are also growing richer and are less frugal than their high-saving parents. Above all, there are lots of them.

Christopher Wood, emerging-markets strategist at CLSA, a Hong Kong broker, talks of “Asia's billion boomers”: in 2000 there were 1.2 billion Asians aged between 30 and 59. That will rise to 1.7 billion by 2020. Over the same period, the same age group in western Europe, and even in America, will shrink.

Asia's boomers are blessed with increasing spending power. Some 1.4 billion may, by 2020, earn at least $5,000 in today's money—the point at which discretionary spending takes off—compared with 306m now. And Asians are moderating their traditionally high savings rates (see chart). Above all, Asia's growing number of well-educated, sophisticated singles and couples enjoy a sense of confidence in their own rising living standards.

These spending patterns are transforming Asia's hitherto export-led economies. Exports and corporate investment still comprise 38% of GDP on average, according to CLSA, but governments from Malaysia to Thailand are openly encouraging consumer demand to foster domestic growth—often, pointedly, as a counter to foreign direct investment...Asia's consumers may soon replace America's as the drivers of global growth.

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