Millennial vs. Generation X spending power in South America: Uruguay
Uruguay is the first high-income country as defined by the World Bank in our analysis of spending power development in South America with a focus on Millennials and Generation X. By the end of 2018, Uruguay had an annual average spending power per capita of $13,352 (in 2011 PPP). The different spending power segments for the following analysis are the Extremely Poor, those who live on less than $1.90 per day, the Poor ($1.90-$5 a day), the Vulnerable ($5-$11 per day), the Middle Class ($11-$110 per day), and the Rich ($110 and over). Millennials refers to the generation born between 1980 and 2000, and the preceding Generation X refers to those born between 1960 and 1980.
The Uruguayan rich is expected to more than double over the next ten years, thereby increasing from 100,000 people today to 218,000 people in 2028. During the same period, the Uruguayan middle class is forecasted to grow by only 4% from 2.85 million to roughly 3 million people by 2028. While the middle class and rich segments of Uruguay are expected to expand, the number of poor and vulnerable people will shrink by 26% and 33%, respectively.
Uruguay’s Generation X will be the age group with the highest increase in the rich segment. Over the next decade, we can expect their numbers to almost triple (an astonishing 198% growth), thus increasing their share in this segment of the population from 27% to 37%.
The number of Millennials in the Uruguayan rich segment is also expected to increase by 88%, while the middle class segment shrinks by 1%. Hence, Millennials’ share in Uruguay’s middle class will decrease slightly from 28% today to 27% by 2028. Today, Millennials represent 23% of the rich segment. Due to demographic trends, their share of this segment will decrease to 20% in 2028.
By 2028, the number of Uruguay’s Millennials in the poor and vulnerable segments are forecasted to decrease by 37% and 39% respectively. For members of Generation X, these numbers will decrease by 20% and 78%.
What does this all mean?
In our previous blog posts about South America, we analyzed the spending power developments of Millennials and Generation X from Bolivia, Peru, and Colombia. In the World Bank’s classification, Uruguay is defined as high-income, Colombia and Peru as upper-middle-income, and Bolivia as lower-middle-income countries. This difference is also reflected in each country's status concerning SDG 1 (ending extreme poverty). Whereas Bolivia is forecasted—if things remain the same—to not be able to fulfill SDG 1 and lower the amount of its people in the extremely poor segment to beneath 3% of its total population by 2030, Peru has already achieved this goal in 2016, and Colombia is expected to follow in 2026 according to World Data Lab’s and Market Pro’s projections.
The richer the country—at least in the four countries sampled here—the more pronounced the projected increase of the number of Generation X in the rich and wealthy segment over the next ten years. While this trend is not so clear in Colombia, the increase in the number of people in the middle class and the rich segments in relatively “poorer” Bolivia will be driven by Millennials.
Why does this matter?
Apart from targeted marketing and product placement strategies which account for age, income, and corresponding lifestyle categories, concise forecasts on demographic and income changes are also important for environmentally related topics like SDG 12, as these factors heavily influence consumption patterns. This might also be important for the development of effective, resource saving circular economies, and climate mitigation strategies.1 Studies on the influence of income and expenditure on consumption behavior identified expenditure as the main independent driver of carbon footprints or total energy consumption of households. Also, age and generation-correlated lifestyle patterns have an impact on consumer decisions.2
World Data Lab combines country-specific historical income distribution forecasts with projections from the Intergovernmental Panel on Climate Change (IPCC) on population trends by age and education, as well as GDP forecasts. Thus, we provide the first internally consistent predictions of spending power development and other indicators for all countries and regions worldwide, even on a local level. For methodology, see our publication in the renowned scientific journal Nature. With our methodology, we can predict socio-economic developments in a precise and real-time manner, and thus accurately support business and policy-making decisions.
1 e.g. Duarte et al., 2012; Hertwich and Peters, 2008; Jackson and Papathanasopoulou, 2008; Lenzen et al., 2006; Marcotullio et al., 2014; Reinders et al.,2003; Tukker et al., 2010; Wier et al., 2001; Wilson et al., 2013