bne:Chart - Size of CEE/CIS middle class surges

By bne IntelliNews July 28, 2015

Francesca Moll in London -

 

Central and Eastern European and Commonwealth of Independent States (CEE/CIS) countries have the fastest growing middle classes in the world, according to recent findings by a public opinion think-tank.

The Pew Research Centre report shows massive increases in the “middle income” populations in Ukraine, Belarus, Moldova and Kazakhstan. All four countries’ middle classes grew by over 20 percentage points (pp) in the decade from 2001 to 2011.

The figures from Ukraine and Belarus are particularly impressive, with the share of Belarus’ middle class climbing nearly 32pp and that of Ukraine a staggering 41.4pp – some of the largest middle-class expansions in the world. Over CEE/CIS as a whole, the average growth of the middle class was 11.3pp.

A striking divide in the EU between established economies and more recent members exists. Founding member states and those that joined in the 1970s, 80s and 90s have seen a slowdown in the expansion of their middle classes, experiencing an average 3.8pp decrease. Countries that joined in 2004, such as Slovakia, Slovenia, Poland and the Baltic states, have seen a stagnation or slight increase, with an average 1pp growth.

The newest members of the union – Bulgaria, Romania and Croatia – on the other hand, have seen explosions in their middle-income populations, with average growth of 18.7pp.

These trends do not necessarily show that the CEE/CIS region is catching up with North America and Western Europe, though. In many of these countries, shrinking middle-income populations were a result of burgeoning “upper-middle-” or “high-” income groups. Notably, the Czech Republic has seen a 22pp decline in its middle-income population, while its upper middle has soared by nearly 20pp.

“Middle income” was defined by the report as those who live on between $10.01 and $20 daily, converted to 2011 prices and expressed in purchasing power parity (PPP) terms.  As the study admits, this is still “a standard of living that is modest by Western norms”.  “Poor” was considered under $2 a day, “low” from  $2.01 to $10, “upper middle” from $20.01 to $50, “and high” anything over $50.  

The historic changes in CEE/CIS occurred alongside a doubling of those defined as middle income, worldwide. Few managed to cross the middle-income threshold in India, Southeast Asia, Africa or Central America, though.  Globally, the majority (56%) of people remain in the low-income category, while 87% of the world’s high-income individuals live in Europe or North America.

Although European emerging markets, alongside China and South America, have made significant strides, the author concludes: “a truly global middle class is still more promise than reality.”

 

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