A big trend in emerging markets over the last decade is the growth of the middle class. According to 2019 estimates from World Data Lab around 600 million Indians are poised to join the ranks of the middle class, with the spending power of this cohort expected to triple to $10.5 trillion.

Consultancy McKinsey forecast in 2019 that the Chinese middle class could hit 550 million in three years. The inter-governmental OECD noted in a report last year that the percentage of the population earning $10 to $50 per day (2005 purchasing power parity), considered a benchmark for the middle class, rose from 21% in 2000 to 35% in 2015 in Latin America and the Caribbean.

The coronavirus crisis is likely to have an impact on the emergence of more affluent populations in developing countries. World Data Lab says the global consumer class (including the middle class and the wealthy) will be 140 million people smaller in 2020 compared with pre-Covid forecasts.

‘The impact of Covid-19 essentially sets the growth trajectory of the global consumer class back an entire year,’ says Homi Kharas, senior economic advisor at World Data Lab. ‘Our estimates are in line with the broader IMF expectations that spending will contract sharply in 2020 but will rebound in 2021.’

Despite this setback the direction of travel is likely to remain the same. More businesses are likely to seek to tap into these markets while the countries themselves may become less reliant on exporting cheap goods to the developed world and see their economies increasingly powered by domestic consumption instead.

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit here

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