Written by Jillian Friesen, Global Economic Intersection Associate
Econintersect: According to the latest research published by the McKinsey Global Institute titled "Urban World", the consumer world as we know it is changing. The research shows many populations currently living in rural areas will soon be living in cities. This urbanization coincides with the focal point of economic activity shifting drastically from west to east.
The population of the world's cities is increasing by 65 million people a year and the rate of growth is projected to accelerate. Implications of these migrations are vast and have the potential to cause a considerable shift in how companies produce and market their products to a greatly expanded global consuming class.
The Institute also released data pertaining to the global cities of the future. Read more . . . to see the data. Click on image to see larger view of artist's impression of city of the future.
The 600 fastest growing urban centers (out of 2,600 examined by McKinsey) will add $30 trillion to the world economy by 2025. This will constitute 65% of the growth over the next 12 1/2 years. Today global GDP is estimated at about $70 trillion. The implied global GDP growth from now until 2025 is about 3% per year Econintersect calculation).
By 2025 it is estimated the newly coined “global consuming class” will add an additional $10 trillion in annual investments.
"... the most dramatic story within the City 600 involves just over 440 cities in emerging economies; by 2025, the Emerging 440 will account for close to half of overall growth. One billion people will enter the global consuming class by 2025. They will have incomes high enough to classify them as significant consumers of goods and services, and around 600 million of them will live in the Emerging 440."
These cities will be focused primarily in Asia. China tops the charts.
The amount of energy and space needed to fulfill the needs of this growing populace is staggering. With the rise in incomes of the masses outpacing the spending of the newly rich, many governments are now questioning how they will deal with the increased demand from the mass influx of workers and consumers. From water consumption to land availability, accomodating these rising populations will be a colossal endeavor. Click here for the links to view the executive summary and full report of the data.
John Lounsbury contributed to this article.
McKinsey Global Institute
McKinsey Quarterly: Cities of the Future