McKinsey partners Bloomberg Singapore forum on shifting global economy

08 October 2018 Consultancy.asia

The first round of speakers have been announced for Bloomberg’s Inaugural New Economy Forum to be held in Singapore next month, with McKinsey serving as the event’s official knowledge partner and Bain chairman Orit Gadiesh  among the featured guest speakers.

Hosted by former New York mayor and media magnate Michael Bloomberg, the inaugural New Economy Forum to be held in Singapore over the 6th and 7th of November will bring together hundreds of preeminent business and political leaders to discuss the changing global economic landscape and the potential role of the private sector in overcoming the many growing challenges.

“The new emerging world order is creating emerging challenges - issues that the private sector can take steps to ensure global stability and growth, an urgent mission in the face of chronic inaction by governments,” stated Bloomberg, in reference to the shifting balance of economic power toward China and India and the rise of other emerging economies such as those of the Middle East.McKinsey partners Bloomberg Singapore forum on shifting global economyAccording to a recent forecast by Oxford Economics, cities in Asia will account for nearly half of the world’s economic activity within just two decades, powered by being home to over a third of the planet’s population and the largest labour force in history. Accordingly, one topic the forum will seek to address is ‘Supercities in the 21st Century’, under the theme of Urbanisation, one of six key themes for discussion during the event.

With McKinsey Global Institute acting as the forum’s official knowledge partner, the event will feature a series of key-note addresses, conference meetings, roundtables and in-depth conversations, breakout sessions and closed-door workshops, with the other key themes on the agenda being globalisation and trade, technology, finance and capital markets, climate, and inclusion.

“One of the key aspects that truly sets the Bloomberg New Economy Forum apart from other conferences is its singular focus on developing a set of concrete solutions to address some of the world's greatest challenges,” McKinsey’s Global Managing Partner Kevin Sneader stated. “We will be working closely with Bloomberg and participants at the forum to produce actionable solutions to be led by the private sector, practical enough to see results starting to appear within 12-24 months.”

Among a raft of prominent speakers, including IMF Managing Director Christine Lagarde, Indonesia’s influential Finance Minister Sri Mulyani Indrawati, and Goldman Sachs CEO David Solomon, will be highly-respected Bain & Company chairman Orit Gadiesh, who has held the role at the MBB firm since 1993 and sits on the New Economy Forum advisory board as just one of her major international board-level positions.

Economic boom will see 500 million Indians enter middle-class within a decade

18 April 2019 Consultancy.asia

India’s economy is projected to grow at a base rate of 7.5% annually to 2030 according to an analysis from Bain & Company, with 500 million people moving into the middle- and high-income bracket over the period.

India has boomed in recent years, buoyed by a growing population and rapid economic development. Today the country is the world’s second largest in terms of population and sixth largest in respect to economic clout – with its economy still growing as one of the world’s fastest, at 7.5% in 2017. As incomes have risen, millions of citizens have moved up into new consumer categories.

An analysis from Bain & Company for the World Economic Forum shows that the future is also bright for the country according to long-term fundamentals, with a growing GDP of which around 60% is domestic private consumption, insulating it to a degree. There is also a healthy savings rate, at around 22% of income, and a large working age population, with a median age of 28 years.Evolution of household income in IndiaThe Indian economy is projected to enjoy strong growth in both the low and high case scenarios considered in the analysis. The base case will see economic growth stable at 7.5% on average until 2030, with just a 1% degree shift either side of this figure for the lower and the higher case scenarios. The effect of growth for the base case is an additional 500 million middle- and high-income earners added to the economy to 2030, with 50 million fewer in the low case scenario – pushing the share of upper-middle and high-income earners to 48% of the total population.

The firm’s projection of income growth would see consumption spending increase from $1.5 trillion to a massive $5.7 trillion by 2030. The growth is largely driven by a huge increase in the country’s middle class households, which are set to expand by 140 million, while the high-income earners are set to grow by 21 million – together a 51% increase on 2018. The middle class will see its share of total consumption increase from 30% to 47%, while around 25 million people will be rise out of poverty, with total poverty decreasing from 15% to 5% of the population.Indian population statisticsUnlike much of the developing world, India is ageing slowly, with a current median working population age of 28 which is set to rise only slightly, to 31, by 2030. The effect is that by 2030 the country will have the largest working age population at the youngest relative age. The rural population has also shrunk considerably since 2005, falling from 59% of the population to 51%.

The developed rural population has grown slowly over the same period, from 13% to 15%. The urban population meanwhile has increased from 28% of the population to 34%. Urbanisation is also set to continue. By 2030, the rural population is projected to decrease further, to 44%, with developed rural only growing by 1% in the period. Urban development is projected to hit around 40% by 2030.

The ongoing urbanisation and rising incomes will lead to further consumer shifts. With considerable changes to income distribution across India, growth in the middle class segment is expected to see around $2 trillion in incremental spending on affordable mid-priced offerings, while a further $2 trillion will be shifted to more premium product lines as consumers trade up.Consumer spending shifts in IndiaBain notes that buying behaviour will shift in line with both trading up as well as in new category spending. In food for instance, around 25% incremental spending will shift towards more premium goods, while around 32% will shift into health and organic food stuffs.  Personal care meanwhile is set to see considerable premiumisation, at 59% of incremental spending, as well as a broadening of product categories.

“India will continue on its path as one of the world’s most dynamic consumption environments, propelled by five major drivers: income growth; steady and dispersed urbanisation; favourable demographics; technology and innovation; and evolving consumer attitudes,” states the report. “As these drivers move India forward, many stakeholders have the potential to shape the country’s positive consumption future.”

It concludes: “The time is ripe for these stakeholders to come together and address head-on the most pressing societal challenges facing India today – skilling and job creation, socio-economic inclusion of rural India, and building a healthy and sustainable future for its citizens. Collaborative efforts to address these challenges will unlock the full potential of a young, connected and thriving nation, and establish India as a model for fast-growing consumer markets of the world.”