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RAPID
population growth, especially the growth of the middle
class, could be the next economic growth driver in the
world if governments and businesses learn to make this
consumption-based growth sustainable, according to the
second Global Growth@Riskreport released by the World
Economic Forum (WEF).
The WEF
report said that by 2012, the world’s population is
expected to grow by almost 7 percent to 6.8 billion, and
by 2050 to 9 billion. Central America, North Africa and
Southeast Asia are the regions with the highest expected
population growth for 2007-12.
By 2012,
the report said the International Monetary Fund’s
population growth projections show Asia and the Pacific
region as the most populated with more than 4 billion
people, over one-quarter of whom live in China.
“Power
is shifting to middle-income economies with a growing
middle class. Such a global middle class will result in
hundreds of millions of people changing dietary habits
and seeking better housing and education, adopting more
sophisticated technology and financial services,” the
report said.
“While
their spending power will drive growth, governments and
businesses need to create ways to make this coming boom
in consumption sustainable,” the report added.
The
report said population growth in itself increases risks
and challenges in terms of food and energy production,
consumption and the environment. The WEF said food and
energy consumption will increase as a higher percentage
of the population increases its income. This, however,
will require an expansion of the current capacity to
produce food and energy.
Further,
middle-class populations, which are located in large and
rapidly expanding cities, are part of the biggest shifts
of population to urban areas. This, in itself, the
report said, also raises risks from the concentration of
millions in areas that lack infrastructure, from roads
and housing to sanitation and health.
However,
the report said the biggest opportunity is for
governments and companies to work together to create the
necessary infrastructure and serve these markets with
more sustainable products and models.
The WEF
believes that if the middle class is presented with
right products, these consumers could influence Western
consumers to choose more sustainable consumption paths.
To make
consumption growth sustainable, the WEF said governments
and companies must invest in efforts to preserve natural
resources and implement technological innovations that
are environment-friendly.
The
report added that conserving natural resources is
important and will determine a country’s independence to
develop and finance its future growth. Companies, the
report said, must understand how their costs are likely
to be influenced by shifts in supply and demand and
explore ways they can innovate when it comes to serving
new markets or developing new goods and services.
“Policymakers will need to find innovative solutions to
promote sustainable behavior, improve the efficient use
of resources and maximize gains from current resources
to expand other areas of the economy. For business, the
opportunity is to innovate to generate growth through
new services and better processes,” the WEF said.
The
report was launched by the Global Risk Network of the
WEF at the Forum’s Annual Meeting of the New Champions
in Tianjin, People’s Republic of China. The report looks
at the potential impact of the credit crisis and its
implications for growth across different markets and
sectors.
The
report was written by the Global Risk Network in
collaboration with PricewaterhouseCoopers, and draws on
interviews with international and regional business
leaders and experts, as well as publicly available
research and articles. |
