Katia Pourgalis

At present the emerging markets make up about 30% of the global economy, with around 80% of the world’s population. Growth into these countries, especially the BRICS countries (Brazil, Russia, India, China and South Africa) offers attractive expansion propositions for mid-level businesses. The growing percentage of middle classes in emerging markets countries is a key factor in the explosive levels of growth which have begun to occur. Populations where the middle class is growing rapidly mean that companies can now focus on selling to the consumers internally within the emerging market zones rather than exporting goods. Katia Pourgalis recently moved to Moscow to witness the transformation in Russia first hand.

In Russia the middle class now accounts for around 104 million people, and this figure is projected to rise by at least 16% by 2020. In China the middle class is estimated at around 160 million and could swell to 670 million over the next seven years, while the middle class in Brazil now encompasses over 50% of the 200 million strong population. For businesses looking to expand these figures show great promise. The middle classes are often referred to in business circles as the consumer classes – the percentage of the population who have money to spare to spend on goods outside of those which are essential for survival.

As middle classes grow and expand the need to improve on the countries’ infrastructure to support this growth creates even more business opportunities. Rail and road networks, communications technologies, electricity consumption and improved water and sewage facilities all go hand in hand with an increase in middle classes. Manufacturers and distributors expanding within emerging markets are able to shorten the supply lines and therefore offer competitive prices internally without additional cost. In India alone the government has pledged to spend USD$1 trillion on infrastructure improvements over the next decade, and at the St Petersburg International Economic Forum this year, attended by Katia Pourgalis and over four thousand delegates from the world of business and government, President Vladimir Putin pledged to commit serious resources to the country’s infrastructure, including half of the national welfare fund and state backed infrastructure bonds.