Consumption in Asia

This paper examines consumption patterns in Asia. The majority of Asian countries, in
particular, those located in East Asia, such as China, are characterized by high GDP
shares of consumption. While over the past two decades there has been a remarkable
growth in consumption, and to a lesser extent of consumption per capita, the GDP share
of consumption has declined by a considerable amount in Asia. The paper presents
projections of the GDP consumption share. The projections are based on time series
models and an econometric model that relates the GDP share of consumption to PPP
GDP per capita growth. Instrumental variables estimates show that the GDP share of
consumption is significantly negatively related to growth: a decrease in PPP GDP per
capita growth of 1 percentage point per annum increases the GDP share of consumption
by around 2 percentage points. Slower growth in Asia would thus significantly contribute
to a higher GDP share of consumption in that region.