Megatrends
The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.
Learn MoreGlobal consumer expenditure growth is expected to accelerate to 3.0% year-on-year in real terms in 2016 from 2.3% in 2015, largely on account of recovery in key emerging markets. Yet, compared to the period prior to 2015, emerging and developing economies are entering an era of slow growth.
At the same time, in developed economies, as the boost to consumer spending from low energy prices fades, it is not always going to be easy to convince consumers to part with their cash. Understanding how the global consumer markets will develop in 2016 and beyond is crucial for consumer goods companies to identify growth opportunities and win new consumers.
Source: Euromonitor International from national statistics/Eurostat/UN/OECD
Note: Data are in 2014 constant prices; Data for 2015 and 2016 are forecasts.
Real consumer expenditure in developed countries is forecast to grow by 2.3% year-on-year in 2016, marginally up from the 2.2% recorded in 2015. The boost to consumer spending from lower energy prices is expected to fade as prices are set to rebound in 2016 while the underlying drivers for consumption growth in developed economies will remain largely unchanged:
Of the major developed markets, the USA is expected to achieve the fastest consumer expenditure growth in 2016, as it maintains the 3.0% real growth achieved in 2015. Meanwhile, Japan will see the strongest recovery in consumption, although the country’s consumer expenditure growth will only be a modest 0.6% in 2016 (compared to -1.2% in 2015). This means that even in the best-performing developed markets, consumers will not necessarily part with their cash more easily in 2016 and companies will need to rethink their strategies in order to identify pockets of growth and generate sales in mature markets.
Source: Euromonitor International from national statistics/Eurostat/UN/OECD
Note: Data are forecast. The five largest developed markets are measured in total consumer expenditure as of 2015.
Real consumer spending growth in emerging and developing economies is set to pick up to 4.4% in 2016, from 2.5% in 2015. This recovery in consumption will be in tandem with the projected improvement in economic conditions in Russia and other commodity exporting countries in Latin America, Africa and the Middle East and Asia, where prices of key commodities including crude oil, natural gas and iron ore are expected to rebound in 2016 and support the labour market as well as household income and expenditure.
Compared to the period prior to 2015, however, consumer spending growth in emerging and developing countries will be moderating to a “new normal” from the above-trend growth recorded in the past. Emerging markets which were previously celebrated for their stellar consumer expenditure growth will become harder for businesses to expand to while companies that are already present in those markets must now adjust to a slow growth era. In China, for example, despite the shift to a consumption-driven economy, consumer expenditure is set to increase by 7.4% in 2016, which is similar to the 7.3% achieved in 2015 but considerably lower than the average real growth of 10.1% per year recorded over the 2009-2014 period.
Source: Euromonitor International from national statistics/Eurostat/UN/OECD
Note: Data for 2015 and 2016 are forecast.
Despite slowing long-term growth in emerging markets and subdued demand in developed markets, companies can still identify and capture growth opportunities in both developed and emerging markets:
As opportunities are becoming harder to identify and capture, companies will need to be more innovative in devising their strategies – by either reducing the reliance on one core market, expanding beyond traditional category, or identifying cross-country consumer segments in order to be more targeted but also more cost effective.