A report by McKinsey Global Institute predicts an increase of USD 23 trillion by 2030 in global urban consumption
GN Bureau | April 5, 2016
Two Indian cities – Delhi and Mumbai – will likely be contributing significantly to global urban consumption during a course of 15 years, as per a report by McKinsey Global Institute (MGI). The global management consulting firm, in its report, has said that global urban consumption will increase by USD 23 trillion by 2030 (from 2015).
The report adds that just 32 cities are likely to generate one-quarter of total urban consumption growth, with 100 cities accounting for 45 percent of that growth. Of the 32 cities, Delhi and Mumbai feature from India, in fact, from the whole of South Asia. In comparison to this, 12 of the 32 cities lie in China alone while 11 are from the US.
Pointing towards the rising importance of emerging economies with respect to consumption, the report says, “In 2015, emerging market cities accounted for just 23 percent of global consumption, but between 2015 and 2030 they will generate 56 percent of consumption growth. Consistent with the importance of North America and China in the global consumer groups to watch, cities in these two regions feature prominently in the global consumption growth landscape. Just 315 large cities in China and North America are likely to contribute more than 40 percent of global consumption growth to 2030.”
Of the top 20 global cities by consumption growth, seven are projected to be in the US and six in China. UK’s London tops the ranking with the highest projected consumption growth rate during 2015-2030, but it is the only European city in the top 20. Here, Mumbai stands at the 11th spot.
The report finds that the demand for goods and services beyond necessities is soaring because millions of people are attaining income thresholds at which their consumption takes off rapidly. “In India, such spending accounted for 35 percent of average household consumption; by 2025, MGI expects this share to have increased to 70 percent. In the case of urban India, household consumption of education and entertainment accounts for more than one tenth of total household consumption. Yet different products tend to take off at different income levels, which means depending on the income level of individual cities, the goods and service markets growing most rapidly will vary,” the report says.
It also finds that just nine groups of “consumers to watch” are projected to generate three-quarters of global urban consumption growth. “Of these, just three groups have the scale and spending power to reshape global demand and the world economy. They are the retiring and elderly in developed countries (aged 60-plus); those of working age in China (aged 15 to 59); and the working-age population of North America (also aged 15 to 59). These three are expected to generate $11 trillion—48 percent—of global urban consumption growth from 2015 to 2030.”
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