How the Growing Global Middle Class Is Reshaping EM Demand

The global middle class now includes about half the world’s population — 4.1 billion people — and has more than doubled since 2009.¹ More important than its size, however, is how these households spend their money.

People aren’t just buying TVs, air conditioners and other products that make life better and more enjoyable. They’re also buying scooters to commute to work, upgrading their mobile data plans and opening bank accounts.

Specifically, they’re choosing goods and services that help them earn income, access credit, connect online and participate more fully in the modern economy. We see this as an underestimated source of growth in emerging markets.

These spending patterns also highlight that EM opportunities extend well beyond technology.

Tech companies have led the EM asset class in recent years, and their stocks continue to benefit from robust AI-related demand. We also see favorable conditions for banks, telecommunications companies, health care providers and other firms positioned to benefit from long-term growth drivers, including the expanding middle class.

Banks and Other Providers See Opportunity in Serving the Unbanked

Access to banking and other financial services has surged in recent decades, yet it remains limited in many emerging markets.

About 1.3 billion adults don’t have accounts at a bank, credit union, mobile money provider or similar institution. More than half live in Bangladesh, China, Egypt, India, Indonesia, Mexico, Nigeria and Pakistan.²

When people go “unbanked,” they may have fewer ways to save money, receive payments and access credit. Financial institutions are working to reach these potential customers, and many are headquartered in the emerging markets they serve.

Capitec, a major South African bank, is one example that offers personal and business banking, consumer loans, insurance and other services. In its most recent fiscal year, the firm reported 7% growth in total active users, while net interest income rose 18% after credit impairments.³

Personal banking makes up much of Capitec’s business, but business banking is gaining momentum. The number of business clients rose by 71% over the last fiscal year.⁴

The launch of a new Entrepreneur Account for sole proprietors, side hustlers and other small businesses helped drive some of that growth. The account makes it easier to accept card payments, separate business finances from personal accounts and potentially access credit.

Capitec CEO Graham Lee said of entrepreneurs and small business owners , “They are the future engine of our economy. They are the future engine of our employment, and the better we can serve them, the better off South Africa will be.”⁵

Telecom Firms Are Capitalizing on the Need for Connectivity

About 74% of the world’s population uses the internet, and the percentage is even higher in emerging markets such as China and Malaysia.⁶

While internet use has become more common in EM countries, significant room for growth remains. In India, for example, about 70% of people use the internet, below the global average.⁷

For Bharti Airtel, a major Indian telecom company, the goal is about more than connecting people. It plans to expand its services to include higher-value data plans, home and business fiber internet, and other offerings. The company aims to increase revenue from existing customers by providing premium services.⁸

Bharti Airtel also holds a controlling stake in Airtel Africa, the second-largest mobile operator in Africa. Lower connectivity rates in Africa could provide more room for growth. In Nigeria, where Airtel Nigeria operates as a subsidiary of Airtel Africa, only 41% of the population uses the internet.⁹

“Africa is where India probably was 10, 20 years back,” said Sunil Bharti Mittal, chair of Bharti Airtel. “You got another 1 billion-plus young people growing at a rapid clip. And what India saw in the last 10 years, Africa will see in the next 10 years.”¹⁰

Private Health Care Providers Benefit from Rising Demand

Demand for high-quality health care is expanding in emerging markets. In Southeast Asia, up to two-thirds of patients seek care from private providers. In Latin America and Africa, the share is as high as half.¹¹

Companies like Apollo Hospitals are responding to this demand. It operates hospitals, clinics, diagnostic centers and pharmacies across India.

Apollo Hospitals has also developed capabilities in highly specialized areas such as cardiology, oncology, neurosciences, gastroenterology, orthopedics and transplants. This type of complex care can generate more revenue per patient.

For the quarter ending June 30, 2026, Apollo recorded year-over-year increases of 15% in patient volume and 24% in revenue for these specialties. These specialties accounted for more than 60% of inpatient net revenues.¹²

“Health care is at the core of a developing economy and a vital contributor to infrastructure, jobs, foreign exchange earnings, and building a healthy and productive workforce,” said Suneeta Reddy, Apollo Hospitals’ managing director.¹³

Growing Consumer Demand Doesn’t Guarantee Stronger Performance

While we’re confident in this trend, we believe investors should be selective when seeking exposure to it.

A larger middle class doesn’t guarantee stronger performance by EM companies in consumer staples and consumer discretionary. In fact, those sectors have underperformed the broader EM benchmark, sometimes by a significant margin, as shown in Figure 1. We believe more compelling opportunities may lie in less obvious areas such as financials, telecommunications and health care.

Figure 1 | EM Consumer Sectors Have Lagged Financials and the Broader Market

Annualized Net Returns (%)

^{Data as of 9/30/2026. Source: MSCI. Past performance is no guarantee of future results.}

Performance can also be uneven across countries. That doesn’t mean there are no consumer-driven opportunities in these markets. It simply underscores the importance of analyzing individual companies and identifying those with strong fundamentals and sustainable growth drivers.

Researchers expect the global middle class to surpass 5 billion by 2035.¹⁴ Many will need access to banking, health care and digital connectivity. In our view, companies that help meet these needs may be among the most durable beneficiaries of this long-term trend.