Emerging Asia’s Growth Champions

China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam are amongst Emerging Asia’s most-established consumer markets. Between them they accounted for 57% of consumer spending in Asia-Pacific in 2014 but by 2030 this proportion will increase to 70%. Looking ahead, consumer spending in these seven economies is expected to grow by 7.3% in real terms annually between 2015 and 2030, ranging from just 0.7% in Vietnam, to 7.4% in China.

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Consumer Expenditure In Asia’s Major Emerging Markets: 2014-2030

 Source: Euromonitor International from national statistics/UN/OECD Note: Data are in constant 2014 prices. Asia’s major emerging markets are defined as: China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam.

Source: Euromonitor International from national statistics/UN/OECD
Note: Data are in constant 2014 prices. Asia’s major emerging markets are defined as: China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam.

Philippines Moves Into Pole Position

Looking at 61 detailed categories of consumer expenditure, from accommodation to meat to insurance to electricity, the Philippines will dominate these seven major emerging markets, with 23 of the fastest-growing categories between 2015 and 2030.

Number Of Fastest-growing Categories Of Consumer Expenditure: 2000-2014

 Source: Euromonitor International from national statistics/UN/OECD Note: Growth rates are calculated using data in constant 2014 prices

Source: Euromonitor International from national statistics/UN/OECD
Note: Growth rates are calculated using data in constant 2014 prices

The Philippines is one of Asia-Pacific’s fastest-growing economies, having averaged real GDP growth of 6.7% for the past three years. Its economy is driven by consumer expenditure – in turn sustained by remittances – strong investment, and higher public spending. Weak commodity prices are also supporting growth.  These economic trends are underpinned by favourable demographics – the median age in the Philippines was just 23.1 years in 2014 by far the lowest of these seven economies, and significantly lower than the Asia-Pacific average.  Last year the country also reached a major milestone with its population reaching 100 million. The population of working age will increase by 29.6% between 2015 and 2030, compared to a 10.6% fall in China.

Looking at consumer expenditure: package holidays, wine and recreational and cultural services are expected to be the fastest-growing categories in the Philippines. The Philippines also tops the growth rankings amongst its fellow emerging market Asian nations in these areas.

The Fastest-growing Categories Of Consumer Expenditure In The Philippines: 2015-2030

  Source: Euromonitor International from national statistics/UN/OECD   Note: Growth rates are calculated using data in constant 2014 prices

Source: Euromonitor International from national statistics/UN/OECD
Note: Growth rates are calculated using data in constant 2014 prices

The Philippines performance is even more impressive when compared against its historical performance between 2000 and 2014, during which time it had none of the fastest-growing categories. At that time, China dominated with 27 of the fastest-growing 61 categories.

Number Of Fastest-growing Categories of Consumer Expenditure: 2000-2014

 Source: Euromonitor International from national statistics/UN/OECD Note: Growth rates are calculated using data in constant 2014 prices

Source: Euromonitor International from national statistics/UN/OECD
Note: Growth rates are calculated using data in constant 2014 prices

For multinationals entering the Philippines, local competition can be tough. For example in consumer foodservice Jollibee Foods Corp. excels and is the leading player – ahead of McDonald’s - through its focus on products that suit the taste profile of local consumers and its nationwide presence. In retailing, local brands tend to dominate, but foreign brands are increasingly entering the market, often through partnerships with local companies. Japanese convenience store giant Lawson’s joint venture with the Philippines Puregold Price Club Inc – the Philippines’ second largest retailer in terms of market share (3.2% in 2014 up from 1.0% in 2009) is just one example.

Indonesia, Thailand And Malaysia Disappoint

Indonesia and Thailand are not home to any “winning” categories. In the case of Thailand this is perhaps not surprising as it is also expected to see the weakest real GDP growth of the seven nations (3.9% per annum between 2015 and 2030). Indonesia however is expected to see a middling performance, of 5.2% per annum, placing it above Thailand, Malaysia and China. Before 2015, consumer expenditure grew at consistently higher rates than GDP. However, between 2015 and 2030 the situation is expected to be reversed. This comes as a result of a re-orientation of the economy away from consumer spending and mining and towards manufacturing, as the government reforms to broaden the country’s engines of growth.

Annual Average Real Growth In GDP And Consumer Expenditure: 2015-2030

 Source: Euromonitor International from national statistics/UN/OECD

Source: Euromonitor International from national statistics/UN/OECD

Malaysia is also a laggard. Of the 61 categories, Malaysia will have just two “winners”- rail and other travel (the latter including inland and sea travel). Yet for rail travel, this is from a very low base. Malaysians spent just US$1.80 on rail travel in 2014, compared to US$5.00 in Vietnam, a much poorer country. This is due to the relatively small rail network, very short average journey length (33km compared to 365km in Vietnam), and a high rate of urbanisation, with the major cities in relatively close proximity to each other.

Per Capita Spending On Rail Travel: 2014

 Source: Euromonitor International from national statistics/UN/OECD

Source: Euromonitor International from national statistics/UN/OECD

Chinese Growth Slackens

China will have 11 of the 61 categories.  A sharp decline from the 27 it had between 2000 and 2014. Some of the biggest slowdowns are being seen in travel – air, rail and other travel and the purchase of cars, motorcycles and other vehicles.  For rail and air travel, China was already the largest spender in per capita terms of the seven, which could explain the slowdown, but in the purchase of cars, motorcycles and other vehicles the market is by no means saturated. Consumer expenditure per capita on this segment reached US$31.2 in 2014, lower than in the Philippines and Indonesia - two countries with similar levels of total per capita consumer expenditure.

The slowdown in transport spending, although relative (China will still see stronger growth than the other countries in the group of seven in most sub-categories of transport spending) will be much stronger than the slowdown in spending overall. The rate of growth of spending overall is expected to halve in 2015-2030, whereas in transport it will fall even more dramatically, from 942% between 2000 and 2014 to 145% between 2015 and 2030.

Real Growth Of Consumer Spending On Transport: 2000-2014/2015-2030

 Source: Euromonitor International from national statistics/UN/OECD

Source: Euromonitor International from national statistics/UN/OECD

Lessons To Be Learned

The lessons to be learned here are that past growth is by no means indicative of future performance. Also a broad interest in emerging Asia outside of China is wise, to take maximum advantage of future growth in the region, and changes in the balance of power. The Philippines will be the star performer to 2030, and India too is also expected to see a surge in the number of categories in which it excels. An interest in China is not enough.


Economic and Consumer Insight with Sarah Boumphrey, Euromonitor International

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