Mapping World Consumption 2014
Comment of the Day

February 05 2014

Commentary by David Fuller

Mapping World Consumption 2014

My thanks to a subscriber for this comprehensive and informative report from Deutsche Bank.

Here is the Summary opening:

This report is an attempt to map out the landscape of global consumption. The idea is to provide the reader with a broad overview of consumption indicators ranging from macro-aggregates and sales of specific products, to market penetration and market shares.

The available data sources were often found to be inconsistent/ incompatible, and sometimes even contradicted each other. We have, therefore, tried hard to make the datasets as internally coherent as possible. We also had to make important choices about presenting the information in a simple, intuitive format that conveyed the essence of our findings without distorting the picture. For instance, we have generally used current US dollar prices to convey the size and shares of different consumer markets even though we know that such a measure is impacted by exchange rate movements and inflation, and does not account for purchasing power parity. Readers should treat the data accordingly and refer to notes accompanying the tables/charts.

While it is difficult to generalize for such a broad overview, a few points do become clear from the data. First, the US is still a formidable consumer market even if it is slowly losing market share. It remains the single largest market for most categories and in a few segments, such as healthcare, retains global dominance (although critics will argue that excessive spending on this category reflects inefficiencies in its healthcare system).

Second, Japan and Europe have lost ground in most categories to emerging markets, most notably China. Indeed, China has displaced even the US as the world’s largest market in a few important segments such as automobiles. Nonetheless, Brazil, Russia and India are individually still small compared to China, US or Japan.  

David Fuller's view

Here is Deutsche Bank’s report: Mapping World Consumption 2014.

I found the graphics particularly interesting, not least the pie charts showing consumption trends among nations.  What one would expect and the text above mentions is that the USA remained the dominant consumer nation throughout the 1990 to 2011 period measured.  We also know that the USA economy continued to expand throughout most of that period but its percentage of global consumption diminished in all categories.  

The flip side is that China’s consumption surged, while the rest of the world (RoW), other than the ten countries shown, expanded in all categories measured.  Developing Asia Pacific is leading that expansion in consumption but it is also growing worldwide. 

Today, international investors are fleeing emerging markets.  That is understandable but it should only be a temporary measure, in my opinion, and the worst is probably already over for some of these countries.  One can participate in their growth directly, if inclined.  Alternatively, one can participate by investing in the mainly western corporate Autonomies which increasingly operate internationally, particularly those which cater to the rising global middle classes. 

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