December 19, 2011
Nomura Research Institute, Ltd.
Nomura Research Institute, Ltd., a leading provider of consulting services and system solutions, has created a forecast for population size and household spending for each income class around the world up to the year 2030. This forecast uses a proprietary forecasting method developed by NRI based upon population trend forecasts, economic growth forecasts, and income trend forecasts made by various organizations such as the United Nations.
According to the "World Population White Paper" released by the United Nations Population Fund (UNFPA), the world's population reached 7 billion on October 31, 2011. It also estimates that 10 years from now in the year 2021 India's population will overtake China, which for years has continued to maintain the world's largest population. As a result, these changes in population dynamics are also expected to lead to changes in the makeup of power relationships in international society between 2020 and 2030.
Given this, NRI created a forecast for the scale of the world's consumer market that is impacted by population dynamics. In particular NRI has focused on the population of the Base of the Economic Pyramid (BoP), which accounts for a large share of the world's population especially today, as well as the new consumer market created by BoP.
NRI's forecast shows that at the current pace of economic development seen in developing and emerging nations the Middle of the Economic Pyramid (MoP) will reach 5.49 billion worldwide and its household spending will be 71.6 trillion dollars (*1) by the year 2030. The forecast also indicates that the MoP in 2030 will consist of 3.52 billion people that moved from the BoP and 1.97 billion people that were originally part of the MoP. In other words, some 64% of the MoP in 2030 will consist of people that have transitioned from the BoP to the MoP as a result of improvements in their income level (see Figure 1).
Viewed by country, for example, NRI's forecast illustrates that the MoP in India, where growth is particularly strong within the broader Asia region, will be 790 million, or 52% of the country's 1.59 billion population, in the year 2030 and its household spending should reach some 10.3 trillion dollars, which is nearly eight times the figure seen in the year 2005. In addition, in our estimation, the MoP in 2030 will consist of some 700 million people that were part of the BoP as of 2005. That is to say, 89% of India's MoP in 2030 will consist of people that have transitioned from the BoP to the MoP as a result of improvements in income level (see Figure 2).
NRI considers the "BoP Business," which is garnering strong attention today, to be an important part of Japanese companies' global strategies to capture demand from those people that will transition to the MoP moving forward. NRI plans to assist Japanese companies to develop strategies and policies in order to enhance their competitiveness in future MoP markets (*2).
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Figure 1. NRI's Forecast for Population Size and Household Spending for Each Income Class around the World
Figure 2. NRI's Forecast for Population Size and Household Spending for Each Income Class in India