Supertrends: Emerging Market Consumers on the Increase
The last couple of years were dominated by hyperglobalization. However, recently we have been observing creating multiple regional powers around the globe resulting in a more multipolar world. Has this phenomenon influenced emerging markets negatively?
Not necessarily, our research suggests. First of all, emerging markets (EMs) are not that much exposed to international trade as people think. On the contrary, in most of EM countries, exports only make up to a third of GDP. Furthermore, EMs have a powerful domestic growth driver: their own consumers. In fact, many EMs are now at a stage of development where they can transform into more consumer and services-driven economies.
At Credit Suisse, we have for years researched the developments in EM consumers. Our latest Emerging Market Consumer Survey yielded the following conclusions:
- There is growing optimism among the respondents when it comes to personal finances, the possibility of a major purchase and the outlook for inflation. Economies in Asia are currently best positioned to improve personal finances.
- Property was bought relatively often last year, but the surveyed do not intend to increase the spending largely this year.
- Spending intentions are strongest for holidays (mostly focused on domestic travel), fashion items and personal care products.
- More affluent lifestyles and demographic change are giving rise to a trend towards healthy living. Consumers surveyed this year are reporting a strong willingness to spend on skincare, quality food and sportswear. Consumption of unhealthy products including tobacco and alcohol is declining.
- Vehicle sales are growing at an annual pace exceeding 20 percent.
- Consumers turn to domestic brands as the US dollar strengthens and imported goods are getting pricey. Domestically produced items are therefore becoming more attractive. National consumer champions should benefit from this trend.
- Consumers are increasingly connected. In Brazil, 91 percent of the surveyed have internet access. 57 percent of low-income consumers had internet access last year, compared to just 36 percent in 2012. Nearly a third of consumers shop online, a share that has more than doubled since 2011.
Although it is not entirely clear what the overall macroeconomic effects of a more self-centered growth period will be, it seems likely we will turn our attention to emerging market consumers, areas we consider multi-year investment themes.