By Kim Jae-won
A Brookings Institution report shows four emerging economies, often dubbed Korea’s rivals, advancing onto the list of top 10 nations in terms of middle class purchasing power but Korea doesn’t make the cut.
The report, compiled and released by the Bank of Korea (BOK), also shows that it is unlikely Korea will get on the list even by 2020.
The middle class is the bulwark of a nation’s economy because they constitute much of the country’s purchasing power that in turn fuels sustained economic growth.
Russia, China, Mexico and Brazil made the list on the basis of statistics from 2009.
“We are ranked out because of our population size, which is smaller than the listed emerging economies,” a BOK official said. “They are getting wealthier, the trickle-down effect resulting in the growing ranks of middle class in terms of purchasing power parity (PPP), another yardstick for a country’s economic might.”
The list showed Russia was ranked sixth with its middle class’ consumption measuring $870 billion, while China grabbed seventh place with $859 billion. Mexico came ninth at $715 billion, and Brazil was 10th at $623 billion. The four nations accounted for 14 percent of total middle class consumption in the world.
The Brookings’ rankings were made on a broader basis by which the number of people who can spend $10 to $100 per day with an annual income between $6,000 and $30,000, a factor that makes the list heavily weighted toward populous countries. Their combined population accounts for 14 percent of the global population.
By this standard, Korea has 94 percent of its population classified as middle class but its relatively small size works against it. For instance, China has a population of 1.3 billion, 28 times more than that of Korea. The other three listed emerging economies also have populations that are far greater than that of Korea.
Other advanced economies were shown in the ranks of the Brookings’ list. The United States ranked No. 1, followed by Japan. Germany is third; France fourth and Britain fifth.
The report predict that in 2020, China is expected to be the top country in terms of middle class consumption size having a PPP of $4.5 trillion, accounting for 13 percent of global consuming power. It represents a five-fold leap from the 2009 figure. India will mark No. 3 in the list with $3.7 trillion.
By then, the U.S. will tumble by a notch to No. 2. France down by three notches to seventh and Britain will bring up the rear at 10.
The 2030 forecast shows an even quicker stride by these emerging markets. India will surpass China as No. 1, both accounting for 41 percent of the consuming power of the globe.
The BOK said that rising consuming power in the emerging economies will create new demands for autos and IT products, helping buttress their further economic growth.
“Consumers, who move from low-income families to middle class, tend to increase its consumption of luxury cars and IT products,” the central bank said in its adaptation of the Brookings report.