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Economy / Jobs

Consumer spending: Which megacities' residents have increasing cash to splash?

There are many ways you can measure the growth of a city. You can measure the change in its population. You can measure the increase in the amount of space it occupies. You can measure the size of its economy.

Or, if you’re the kind of person who likes to sell things to other people – or the kind who likes to sell information to those persons who are – then you can just look at who’s spending.

So, that’s the topic of this week’s sermon infographic. Last month, Euromonitor International, the world’s “leading independent provider of strategic market research” (yes) published data showing how consumer spending in the world’s megacities (that is, those with 10m+ people) seemed to be changing. Our old mates at Statista turned it into a chart, and this is the result:

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Image: CityMetric/Statista. Click to expand.

So, what does it tell us? Some observations…

1) Most of the world’s biggest cities are in the developing world

This isn’t about the economics, but it’s worth noting nonetheless. There are currently reckoned to be 30 megacities in the world. Only seven of these are in the developed world, and three of those in Asia.

So, in our western dominated world, only four of the world’s megacities are in the west: two in Europe (London and Paris) and two in the US (New York, Los Angeles).

2) Some BRICs sink…

Remember the “BRICs” – economist Jim O’Neill’s acronym for the world’s next set of economic superpowers (Brazil, Russia, India, China) Well, some of them aren’t looking so healthy.

There are only three megacities where consumer spending is thought to have fallen in 2015-16: two in Brazil (Sao Paulo, Rio de Janeiro) and one in Russia (Moscow). There are no other megacities in those two countries.

The reasons for the two crises are different – Russia is struggling thanks to the collapse in oil prices and Western sanctions; in Brazil it’s a recession brought on by fiscal crisis – but nonetheless. Two of the BRICs aren’t looking so healthy right now.

3) It helps if you’re rich

The figures shown here are absolute, not percentage ones – and this explains why developed world cities top the charts.

The $23bn increase in consumer spending in New York looks huge – but it’s an increase of less than 2.6 per cent of the $900bn it saw the previous year. In per percentage terms, the increases in Los Angeles (2.8 per cent) and London (2.6 per cent) are similarly middling.

So where are the biggest increases?

4) …and some BRICs soar

A lot of them are in China, unsurprisingly. Guangzhou’s extra $7bn is a 7.7 per cent increase; in Wuhan it’s 8.3, in Beigjing it’s 8.9, and in the northern port city of Tianjin consumer spending is thought to have increased by 9.4 per cent this year.

But they’re not the biggest increases of all. Those are in the Pakistani city of Karachi (9.5 per cent) and the Indian capital Delhi (10.5 per cent). Other Indian cities are doing pretty well, too: in Mumbai, spending is up by 6.6 per cent; in Kolkata it’s 7.1.

5) BRICs aren’t everything

A number of cities outside the big emerging markets are also on their way up. To quote the blogpost in which Euromonitor first published the data…

While spending per capita in Jakarta is relatively low ($3,000 in 2015), Bangkok ($6,000) and Istanbul ($10,000) are roughly in line with Chinese megacities. By 2019, each of these three megacities is estimated to have 4-5m households with disposable income over $10,000, which will be about the amount that Tianjin, Guangzhou or Shenzhen has today.

So – those people with shiny stuff to sell are likely to focus their attention on the big, rich cities of the west for some time to come. But the options open to them are widening.


 
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