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(from Regional Focus: More Discretionary Spending by Households in Asia Pacific comment article)

Asia pacific discretionary spending grows
Rising incomes, falling birth rates and changes in household profiles in Asia Pacific have shifted the region’s spending patterns from expenditure on essentials towards more discretionary spending. Spending on transport, communications and health goods and medical services have experienced the fastest growth during 2000-2010. High-income households account for the bulk of discretionary spending while low and middle-income households remain an important market segment for essential products.

Key points

  • Driven by falling birth rates and rising income, the number of household occupants in Asia Pacific declined from 4.3 in 2000 to 4.0 in 2010;
  • Meanwhile, due to cultural shifts and a greater female participation in the workforce, the number of single person and couple without children households rose to 8.1% and 13.0% of total households in Asia Pacific, respectively, from 7.3% and 11.1% in 2000;
  • Changes in household profiles and rising incomes have contributed to a shift in consumer spending patterns in the region from expenditure on essentials such as foodstuff and housing towards more discretionary spending – that is on all categories excluding housing and food and non-alcoholic beverages. In 2010, discretionary spending accounted for 60.8% of total expenditure, up from 58.8% in 2000. Categories which experienced the strongest growth rates in the region include transport, communications and health goods and medical services;
  • Higher-income households are the major driver of discretionary spending across Asia Pacific. For example, a household in Indonesia in income decile 10 (the richest 10.0% of households) spent 63.3% of their expenditure on discretionary categories in 2010, compared to 38.6% made by decile 1 (the poorest 10.0% of households);
  • The trend of households getting smaller should continue in the coming years in Asia Pacific while the region’s per capita annual disposable income should increase from US$2,711 in 2010 to US$5,387 by 2020. This would allow more discretionary spending and create good business potential for a wide range of sectors.

 

 

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