HP Innovation Journal Issue 12: Summer 2019 | Page 30

In 2020, half of the world’s middle and upper classes will be Asian. 1 The ascendance of Asia on the global economic stage is undeniable, returning the region to a stature and influence it has not held for centuries. (For more informa- tion, see sidebar, “Asia’s GDP History: Back to the Future.”) Where the 19th century economy arguably “belonged” to Europe and the 20th to the U.S., Asia is poised to be the global economy’s dominant force in the 21st century. As a method for analyzing and comparing income growth globally, one measure HP researchers use is the broad seg- mentation described as “haves” and “have nots.” According to Gallup, “haves” include households meeting a minimum annual income threshold of $35K Purchase Power Parity (PPP). Worldwide, across all regions and countries, the number of “haves” has been growing and is projected to continue to rise through 2035. Asia’s growth is forecast to be larger than the rest of the world’s, with almost 600 million new “haves” households in this period. That’s like six new markets the current size of the U.S. The “haves” growth forecast in Asia is led by China, India, and Indonesia. In Indonesia, for example, an additional 4 out of 10 house- holds are expected to move into the “haves” category by 2035. 2 The growth of the “haves” population in Asia highlights the potential market opportunity (i.e., TAM growth) forecast to play there. Here are the 2010-2035 forecasts by region 3 : NORTH AMERICA +34% OR 66M HOUSEHOLDS LATIN AMERICA +21% OR 39M HOUSEHOLDS EUROPE +8% OR 67M HOUSEHOLDS MIDDLE EAST / AFRICA +18% OR 78M HOUSEHOLDS APJ +42% OR 585M HOUSEHOLDS 28 HP Innovation Journal Issue 12 CHINA: THE LION’S SHARE OF GROWTH TO DATE As noted earlier, a significant portion of Asia’s gains come from China. In the past four decades, China has lifted 800 million people out of poverty—an historic achieve- ment. It’s generally easier for poor countries to show dramatic improvement numbers, and this has been true for China by virtue of its population size and the number of people living in poverty. Still, among countries con- sidered “emerging,” China is clearly outpacing its peers. In the next decade, China will increasingly start look- ing like a developed nation, with the highest number of middle-class households and the second highest number of affluent households in the world. China’s growth is forecast to account for 44% of all Asia’s household income