Is the power shifting to the world's middle class?

April 10, 2017

Filed under Data Viz

The importance of the emerging economies, or the middle-income countries of the world, cannot be emphasized more in today's world. Arguably, they are growing at a faster pace than advanced economies, and their income share of the global economy has been continuously increasing.

In the most recent IMF World Economic Outlook , the emerging economies account for almost 77% of the pace of the world's growth. This means, if the world were growing at 3.07% percent in 2016, 2.37% of this growth is attributable to emerging and developing economies; while a meager 0.7% is from advanced economies. Truly, the tide has shifted. It is pretty ironic that the emerging and developing economies are "advancing" faster than the advanced economies for most of the past decade.

What I mentioned above is the pace of growth, or the growth rate. This is quite different from the level of GDP, which I explore in the viz below.

Quick start tip
How to read the chart: The World GDP pie in 1990 is $23.472T. Emerging Markets, or EMs, held 17.91% of that pie. In 2022, EMs are projected to hold 22.02% of the world's GDP pie (which is valued to be $99.947T).

What this means

While the rate of growth of Emerging Markets, is fast, and outpacing the rate of growth of Advanced Economies, the latter still holds the majority of the world's wealth. The share of Advanced Economies in world GDP is still currently bigger than Emerging Economies, but this share has significantly shrunk since 1990. In 2015, the share of Emerging Markets and Developing Countries (or EMDCs, including China) is at 40%. If the exponential rate of growth continues for EMDCs, then sooner or later, the pie will shift in favor of Emerging Markets.

If you are one the those believers of the cliche, "Whoever has the money has the power," then more attention should be given to the middle class.


Reference

IMF's World Economic Outlook database. Available on data.imf.org.