Millions Are Tumbling Out of the Global Middle Class in an Historic Setback

An estimated 150 million slipped down the economic ladder in 2020, the first pullback in almost three decades.

 

By Shawn Donnan, Vrishti Beniwal, Marisa Wanzeller, Shannon Sims, Prinesha Naidoo, Randy Thanthong-Knight, Suttinee Yuvejwattana, Phil Kuntz and Michelle Jamrisko, Bloomberg Businessweek

Apr 7, 2021

 

One of the most economically significant trends of the past few decades has been the emergence of a global middle class. The expectation that this cohort of consumers would continue to grow relentlessly, as rising incomes in developing countries lifted millions out of poverty each year, has been a central assumption in multinationals’ business plans and the portfolio strategies of professional investors.

 

You can now add that to the list of economic truths that have been upended by this pandemic. For the first time since the 1990s, the global ­middle class shrank last year, according to a recent Pew Research Center estimate. About 150 million people—a number equal to the populations of the U.K. and Germany combined—tumbled down the socioeconomic ladder in 2020, with South Asia and sub-Saharan Africa seeing the biggest declines.

 

Defining the parameters of this global middle class has long been a contentious exercise. Pew, which has been researching the topic for more than a decade, labels as middle income those making from $10.01 to $20 a day, using data that smooth out differences in purchasing power across countries. In Pew’s analysis, there’s a separate ­upper-middle-income band made up of those earning $20.01 to $50 a day. (Note that $50 per day falls shy of what a minimum wage worker in the U.S. takes home pretax for an eight-hour day.) Others, such as the Brookings Institution, have opted for a more expansive $10 to $100 a day definition.

 

Taken together, Pew’s middle-income and upper-middle-income brackets encompass roughly 2.5 billion people—or a third of the world’s population. Buried inside these big numbers are many personal stories. Here we bring you four, from India, Brazil, South Africa, and Thailand. They’re tales of hard-won successes that evaporated overnight, along with well-paying jobs. Of once-­accessible luxuries, like steak for dinner or home internet access, now out of reach. Of dreams deferred, whether an automobile or an apartment...

 

A Dream of Car Ownership Postponed ...

 

From Beef to Eggs ... 

 

Formal to Informal ...

 

When Will the Tourists Return? ... 

 

more, including links, charts, infographic, photos 

https://www.bloomberg.com/features/2021-emerging-markets-middle-class/