Household Consumption Models in Asia

The aim of this article is to develop a conceptual framework and typology of household consumption models and, based on this framework, propose a corresponding categorization for 10 countries in the Asian region (China, Japan, the Republic of Korea, India, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam). The author proposes a typology consisting of five models of household consumption: 1) income-driven; 2) urban-structural transformation; 3) institutional-financial; 4) socio-demographic transformation and 5) inflation-adaptive. The concept is based on identifying the key drivers of consumption growth through regression modeling, followed by an assessment of the contribution of each determinant to the growth rate of household consumer spending. The study fi nds that the dominant models for the countries of the Asian region are income-driven and urban-structural transformation. At the same time, the institutional-fi nancial model is the primary one in Japan and the accompanying one in the Republic of Korea and, to a lesser extent, in Vietnam. The inflation-adaptive model is evident in Japan and the Philippines, while the socio-demographic model is dominant in the Republic of Korea and Singapore and has emerged as a secondary in Malaysia and Thailand in the context of pandemic. China and India remain the largest consumer markets. In Japan, the potential for household consumption growth is exhausted; in the medium term, the consumer markets of Singapore and the Republic of Korea are also expected to reach the limits of their growth potential. Meanwhile, Malaysia, Thailand and India are projected to be the centers of intensive consumer demand growth in 2025–2035, followed by Indonesia, Vietnam and the Philippines in 2030–2040.