The world’s middle class is growing at an unprecedented rate, with over 4 billion people now qualifying for economic mobility. As this dynamic group continues to expand, it will have a profound impact on global economic growth and stability.
For the first time in history, over 4 billion people qualify as middle class, with incomes ranging from $12 to $120 a day. This represents a diverse economic group made up of individuals with vastly different lived experiences. The most dynamic and upwardly mobile individuals across Asia, Latin America, and Africa are crossing the lower threshold of middle-class status in record numbers, creating powerful upward economic momentum.
The middle class is a socio-economic group characterized by moderate income and education levels.
According to the Organization for Economic Co-operation and Development (OECD), the middle class comprises individuals who earn between 75% and 200% of their country's median household income.
In developed economies, the middle class typically accounts for 60-70% of the population.
They often prioritize financial stability, education, and healthcare over luxury goods and services.
The Rise of the Global Middle Class
According to World Data Lab projections, more than 1.1 billion people entered the middle class during the last 10 years, with an additional 1.1 billion expected to join them over the coming decade. By 2035, this group will be 2 billion strong, with four-fifths of them in Asia. This shift marks a significant turning point, as these individuals will have income to spend beyond basic necessities and can pursue economic and social opportunity and connection.
From Vulnerability to Resilience
When economically vulnerable people move into the middle class, they also shift from a mindset focused on minimizing risk to one of maximizing opportunity. Joining the middle class marks the moment when people transition from subsistence to resilience. Public and private sector leaders can play a crucial role in helping these individuals cross this bridge and avoid backsliding.
Inclusion in the Digital Economy
Economically vulnerable populations around the world share a necessity for financial inclusion: basic access to the financial system. The Mastercard Center for Inclusive Growth has been working to connect underbanked and un-networked communities to the benefits of the digital economy, such as access to critical services, capital, and digital tools. The goal is to bring 1 billion people into the digital economy by 2025.
Financial inclusion refers to the access and usage of financial services by marginalized communities.
It involves providing affordable, convenient, and secure banking services to underserved populations.
According to a World Bank report, in 2017, an estimated 1.7 billion adults worldwide lacked access to basic financial services.
Mobile payments and digital wallets have been instrumental in increasing financial inclusion rates globally.
Expanding Access to Financial Services
To promote upward mobility, the Center for Inclusive Growth intends to evolve its strategy on financial inclusion toward broad concepts of financial security and financial health, such as access to credit, emergency savings, and insurance. Expanding access to multiple financial services and supporting small- and medium-sized business entrepreneurs will be key areas of focus.
The Power of Entrepreneurship
Entrepreneurship is a powerful lever for driving financial inclusion. Micro-enterprises and small businesses make up more than 90% of global businesses and employ half the world’s workers. The Mastercard Strive program, which has helped 40 million small businesses access training, forge connections, and tap into capital as a catalyst for growth, will remain crucial in driving impact and creating higher-paying jobs.
Entrepreneurship is the act of creating and managing a business, often with significant financial risk.
It involves innovative thinking, strategic planning, and calculated risk-taking to launch and grow a successful venture.
According to the Global Entrepreneurship Monitor (GEM), over 300 million people worldwide are involved in entrepreneurship, contributing significantly to economic growth and job creation.
Cybersecurity: A Growing Threat
However, small and medium-sized business owners face new threats, including cybercrime and online fraud. A Mastercard survey reveals that 46% of these entrepreneurs have experienced a cyberattack on their current business. This represents an enormous threat to economic mobility’s ability to sustain itself in the long term.
A Secure Digital Environment
‘A big, vibrant middle class that feels empowered to reach for opportunity is our most potent tool for spurring sustainable economic growth globally.’ A digital environment that is both inclusive and secure is the foundation on which everything else will grow.
