India and China are expected to make up 15 per cent of global consumption by 2030, with India’s share set to double between 2016 and 2030.
Despite the cyclical challenges in 2018, India remains at the top of the ranking in overall consumer sentiment and Brazil has overtaken China to come second, according to Credit Suisse Global Wealth Report by Credit Suisse Research Institute.
Among the positive drivers of this sentiment are India’s resilient economy and improvements in infrastructure such as roads, internet, and electricity, BusinessLine reported
China, however, appears to be seeing the effects of the US-China trade tensions with a tempering consumer confidence. Further, the prevailing real wage growth is at its lowest in seven years in China, the Credit Suisse said.
India and China are expected to make up 15 per cent of global consumption by 2030, with India’s share set to double between 2016 and 2030, said the report. This indicates the growing relevance of the consumer in India and China.
The report noted that both the markets have benefited from a demographic dividend, and each country is at a different stage. “China is now already at a demographically higher stage of development than India. Yet, with its working-age population soon to surpass that of China, India has better long-term demographics for growth,” the Credit Suisse report said.
The report added that China still ranks high in relative terms and holds the second largest pool of wealth worldwide. It called China’s enrichment as impressive, the report said.
In the last 18 years, wealth per adult in China has multiplied by 11 times, (from $4,000 to nearly $50,000 today), compared to four times in India (from $1,826 to $7,024). During the time period, 52 per cent of population in China moved to the $10,000-$100,000 wealth bracket, while 7 per cent of the population moved to the $100,000-$1,000,000 bracket. To put both economies in perspective, India's aggregate wealth today represents only 10 per cent of China’s, the report said.
On the growth potential for consumer goods and services versus GDP/per capita, the report notes that growth potential for apparel and meat will be high in India, with its GDP pegged at $2,000-$5,000, whereas education, healthcare, consumer credit, beauty products and tourism feature high in China, with its GDP pegged at $10,000- $25,000.
Further, patterns of consumption are set to evolve, the report said. Most of both Chinese and Indians’ incomes are still spent on basic necessities such as food and non-alcoholic beverages, but the pro-rata allocated to it has nearly halved over the past 30 years, the report said. Further, it said, this mix shift should continue as wealthier consumers tend to spend a larger proportion of their income on non-essential goods such as durables and consumer services.