The rise of the educated middle class in Asia-9  2  BIS Review 7/2006  has grown considerably. This affluent middle class has an appetite for consumption that can help sustain growth in the region well into the next decade. MasterCard International recently did a study which tracks consumer trends in Asia and defines the middle class as those earning more than five thousand US Dollars per year. According to this study, when a person’s income reaches this level, consumption moves very quickly from basic to discretionary spending – that is to fuel holidays abroad, eating out, and visiting shopping malls – which is a powerful driver of domestic demand within the region. This same study estimates that this middle class will almost double by 2010, signaling the arrival of the Asian consumer as a key driver of growth in the region. Third, an important reason for these successful relationships has to no small extent been driven by the cultural and ethnic ties within East Asia. These ties, which came about because of historical, geographical and cultural proximity, may vary greatly from country to country, but have no doubt played a part in lubricating the wheels of trade and investment in the East Asian region. Going forward, domestic demand in the region will continue to grow and further support growth in intra-regional trade. The lowering of tariffs in most Asia-9 economies and bilateral free-trade agreements have supported the development of the “pan-Asia” supply chain.
Minister, you have the floor! 2  BIS central bankers’ speeches