GLOBAL - The Chinese could challenge Americans as the world's largest consumers by 2025, and will more than compensate for any US sluggishness, Goldman Sachs Asset Management chairman Jim O'Niell believes.
O'Neill, who famously coined the acronym ‘BRIC' for the world's leading four emerging nations (Brazil, Russia, India and China), said: "The implications (of this development) for global markets and consumer-related sectors in particular - including consumer durables, luxury goods and travel and tourism - remain dramatic."
He added growth of Chinese consumers could also propel the combined market capitalisation of China's listed companies beyond America's by 2030.
O'Neill said over the coming decade consumers in Brazil, Russia, India, and China could rival America's, who consume about $10.5trn a year and account for 17% of global GDP.
Presently Bric consumers spend only $4.2bn, just 40% of what their American counterparts spend. The Chinese spend about $1.8trn annually.
However, since 2000, BRIC consumers have tripled their expenditure while Americans have doubled theirs.
"The developed world cannot compete with the four BRIC countries in terms of growth and incremental consumption by the end of this decade," O'Neill said.
India and China will dominate the growth in future, O'Neill said, but Indonesia, Mexico and Turkey "might also gain substantial gravity as major consumption stores.
"The rise of the BRIC's and (the next 11 emerging nations') consumer is one of the most important strategic stories of our times," he added
China could be the largest luxury goods market by 2025, having already become the largest car maker by sales, O'Neill said
"If China succeeds in raising its consumption to GDP ratio over the next few years and the US ratio falls to its historic average, the Chinese consumer alone could challenge the US in the first half of next decade."
This would be no mean feat. Over the past decade US consumers have accounted for about three quarters of the US economy's growth.
By 2025, Goldman Sachs economists predict, China's consumption-to-savings ratio will grow from 35% to 55%. Over the same period, that for US consumers will fall.
By 2025, O'Neill predicts, China's luxury goods market could grow 18 times its present size to $328bn, and account for almost $1 in every $3 spent on luxuries globally.
BRIC nations could represent half global luxury item expenditure, up from 15% today, he said.
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