.png)
Generation Z is often portrayed as a cohort marked by pessimism, affected by the COVID-19 recession and the climate crisis. However, a recent report by World Data Lab and NielsenIQ reveals a different perspective: Generation Z will be the largest and wealthiest in history, with benefits distributed more equitably across the globe. Here’s an insight into the growing impact of Generation Z's purchasing power...
Author:
Wolfgang Fengler, former lead economist at the World Bank and CEO of World Data Lab.
Copyright: Project Syndicate, 2024.
As a father of three children who are at the heart of Generation Z (born between 1997 and 2012), I have worked to prepare them for the uncertainties and challenges of the 21st century. My wife and I wonder how they will navigate their way to independence and how they will reshape our society and economy.
Although the outlook is not entirely optimistic, with a global pandemic and worsening climate crisis, members of Generation Z are often perceived as pessimistic, exemplified by the prominence of Greta Thunberg. Nonetheless, the report “Spend Z: Gen Z Changes Everything” presents an encouraging view. Generation Z will not only be the largest and wealthiest but also see its benefits distributed more evenly worldwide.
With 2 billion members, Generation Z constitutes approximately a quarter of the global population, and due to the significant reduction in child mortality over the past 30 years, it will maintain this dominant demographic position longer than its predecessors. Despite global challenges, members of this generation have more purchasing power than previous generations, across all continents.
The report compares the current per capita spending of 25-year-olds with that of Generation X and Millennials at the same age, adjusted for purchasing power parity. Generation Z members spend about 25% more than Millennials in North America and Europe, and twice as much in Asia and the Pacific. Although their current purchasing power is lower than that of Baby Boomers and Millennials, their total spending is expected to rise from $9.8 trillion to $12.6 trillion by 2030, once they enter the workforce.
Unlike previous generations, Generation Z’s purchasing power will be concentrated in emerging markets. Only 10% of this generation comes from North America or Europe, while it represents 33% of the population in Sub-Saharan Africa and 28% in South Asia. Emerging markets, especially Asia, will dominate this generation’s spending, already accounting for 55% of total expenditure.
Digital natives of Generation Z will have more access to information and greater spending freedom than any previous generation. This shift will significantly impact manufacturers and retailers, who must adapt to harness the potential of this growing consumer demographic.
Comments