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The global consumption pools are witnessing a significant shift from regions like North America and Western Europe to India and emerging Asia, according to a report by McKinsey Global Institute.
This transformation highlights the growing importance of these regions in the global economic landscape, driven by rising incomes, changing demographics, and evolving consumer preferences. The report said, "Consumption pools are shifting from North America and Western Europe to emerging Asia and India.... Developing countries will provide a growing share of global labour supply and of consumption, making their productivity and prosperity vital for global growth." According to the report, India and emerging Asia are poised to account for 30 per cent of global consumption at purchasing-power parity (PPP) by 2050, a substantial increase from just 12 per cent in 1997. In contrast, Advanced Asia, North America, and Western Europe are projected to contribute only 30 per cent to global consumption, a sharp decline from their combined 60 per cent share in 1997. This shift, the report noted, carries profound implications for businesses worldwide. Companies in both developed and developing regions must adapt to this evolving market dynamic. As income levels and consumption patterns grow in later-wave regions like India and emerging Asia, businesses will need to recalibrate their strategies to cater to changing local tastes and preferences. Developing and scaling products that align with the unique needs of these markets will be crucial for capturing growth opportunities. In the context of demographic shifts, "first wave" and "later wave" regions typically refer to the sequence in which countries or regions experience demographic transitions, such as ageing populations or declining working-age populations. The report also highlighted the role of demographics in shaping future consumption patterns. By 2050, seniors are expected to account for one-quarter of global consumption, doubling their share from 1997. Meanwhile, developing countries will not only contribute significantly to the global labour supply but will also emerge as key drivers of consumption. The prosperity and productivity of these regions will play a pivotal role in sustaining global economic growth. However, the report cautioned that navigating these markets may present challenges. Many later-wave countries, including India, have complex legal and governance environments and are prone to conflicts, making market entry and expansion more difficult. Additionally, affordability will become a critical factor as businesses target a larger consumer base in these regions. Over the next 25 years, countries in later-wave regions are expected to drive more than half of global consumption, thanks to their fast-growing young populations and increasing incomes. This shift highlights the need for businesses to innovate and adapt to thrive in a rapidly changing global market. (ANI)
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