After the Oil Shock: What the Data Says About Global Consumer Resilience

World Consumer Outlook Webinar #10 | World Data Lab

The tenth edition of the World Consumer Outlook webinar brought together World Data Lab's Co-founder and Chief Economist Homi Kharas, Chief Operating Officer Thomas Bauer, World Bank Chief Economist Indermit Gill, and McKinsey Global Institute Senior Partner Anu Madgavkar to examine how the current oil price shock is reshaping global consumer demand.

The headline finding may be counterintuitive: despite the severity of the disruption, the global consumer class remains on a growth trajectory.

The Consumer Class Continues to Grow

World Data Lab projects that 113 million people will join the consumer class in 2026, with nearly $3 trillion in new global spending. The majority of these new consumers will be in Asia.

Before the conflict driving the current oil shock, WDL had forecast 119 million new entrants to the consumer class in 2026. The IMF's April World Economic Outlook, which forms the basis of WDL's baseline projections, revised that figure down to 113 million.

Under the IMF's moderate shock scenario, that number falls further to approximately 86 million. Under a severe shock, it drops to around 72 million. In all scenarios, the consumer class continues to grow.

Looking at historical trends, the consumer class was expanding by 120-130 million people annually before COVID. After a sharp contraction and recovery, the post-COVID rate has settled at between 100 and 115 million per year. The 2026 trajectory is consistent with that range.

WDL also projects a bounce-back in 2027 that would not only offset the 2026 reduction but slightly exceed pre-conflict forecasts, partly because underlying assessments of global economic strength have been revised upward.

Where Growth Is Happening, and Who Is Losing Ground

The distribution of new consumers is uneven. Asia remains the primary engine of growth, with India, China, Indonesia, Vietnam, the Philippines, and Malaysia all adding significant numbers to the global middle class. Africa is also growing, though from a smaller base. Latin America and the advanced economies are contributing comparatively little, largely because their populations are already predominantly within the consumer class, and natural population growth is low.

When comparing current projections to pre-conflict forecasts, commodity-exporting economies, including Russia, Brazil, Mexico, and Australia, are seeing upward revisions. India's economy has also proven more resilient than earlier models anticipated. Advanced economies, particularly in Europe, given their dependence on imported energy, have seen the largest downward revisions in dollar terms.

Two Consumer Worlds

There is a structural divergence between two distinct consumer markets that predates the oil shock but is being accelerated by it. In advanced economies, the consumer population is stable or declining. The middle class is weakening, while the affluent segment, defined as those spending more than $90 per day, is growing. Affluent spending in advanced economies is projected to grow 30% over the forecast period, while middle-class spending shrinks by 7%. These markets are no longer volume growth stories. Growth, where it exists, comes from premiumization and capturing a greater share of wallet from higher-income consumers.

In emerging markets, the dynamic is the opposite. The consumer class in emerging Asia is expected to grow from 2.7 billion to 3.4 billion over the next decade, an increase of nearly 1 billion, while the region's total population is projected to grow by only 300 million. This growth is driven by people crossing the $13-per-day threshold into the consumer class, not by population growth alone. China's consumer class crossed one billion for the first time this year. Africa, the only major region with fertility rates above replacement level, is growing the middle class fastest in percentage terms at 65%, though the absolute base remains smaller than that of Asia.

For businesses, these two fundamentally different growth engines requiring different strategies: premiumization and wallet-share gains in mature markets, and volume-based expansion in emerging ones.

The Severe Scenario

Under WDL's severe scenario, involving significantly higher oil prices sustained into 2027, global consumer spending would drop from a baseline of $101 trillion to approximately $99 trillion, a reduction of $2 trillion, roughly equivalent to the size of the Italian economy.

In terms of people, 40 million fewer individuals would enter the consumer class in 2026 under this scenario. The net effect on the middle class, accounting for people falling back from higher spending tiers, would be 33 million.

The countries most affected in absolute terms would be India, which accounts for more than a quarter of the impact, followed by China and Indonesia. Together, these three account for more than half of the total effect. In relative terms, Bangladesh, Iran, and India show the steepest impacts, at between 1.5% and 2% of their consumer-class populations.

By generation, Gen Z and millennials face the greatest exposure, both because they are concentrated in the affected markets and because they represent the cohort currently entering or newly within the consumer class. Baby boomers are the most insulated, though that generation is also shrinking with no new entrants.

The Panel Discussion

World Bank Chief Economist Indermit Gill offered a more cautious reading. He noted that WDL's projections rest substantially on the continued resilience of three economies: the United States, China, and India, which together account for approximately half of global output. Removing any one of them from the aggregate figures significantly changes the picture.

Gill also raised three transmission risks that he argued the baseline may underweight. First, inflation: countries already struggling with it, notably Argentina and Turkey, face heightened pressures due to exchange rate effects. Second, financial markets: capital outflows from emerging and developing economies are already running at levels higher than during the Ukraine shock and continuing to fall. A financial shock, in his view, poses greater systemic risk than the commodity shock itself. Third, policy mistakes: historical precedent, including rice export bans during earlier price spikes, shows that government overreactions can significantly amplify price increases in food and other commodities.

Kharas pointed to the adaptability already visible in supply chain data. South Korea, for example, has substituted roughly 8% less Gulf oil by sourcing from Malaysia and Indonesia, illustrating how quickly supply chain reshuffling can offset disruption.

AI, Productivity, and the Consumer Outlook

Anu Madgavkar addressed the parallel question of AI's role in the consumer economy. She identified two dimensions: AI as an energy consumer, and AI as a productivity driver.

On energy consumption, she described current concerns as likely overstated. AI currently accounts for approximately 1.5% to 2% of global energy consumption and is projected to rise to 3% to 5% within five years. Energy efficiency within AI systems is improving rapidly. The more relevant risk, she argued, is geographic concentration, with some communities disproportionately affected.

On productivity, she cited McKinsey estimates of 2% to 3% annual gains achievable through the automation of current work. While there are transition risks, particularly for younger people entering the labor market, latent demand and the scope to reallocate human capacity to tasks requiring human skills provide a significant buffer. She also noted that a portion of current US consumer strength, estimated at around $200 billion in consumption, is linked to the wealth effect from AI-related financial valuations, reinforcing the premiumization dynamic.

Three Takeaways

The consumer class is structurally resilient. Through trade wars, COVID, the Ukraine conflict, tariff cycles, and now an oil price shock, global consumer spending has continued to grow or recover rapidly. Asia is the structural engine, adding around 70 million new consumers annually and accounting for more than half of global additions.

Plan for a severe scenario. Businesses should model a floor scenario involving 40 million fewer consumers and $2 trillion less in consumer spending, with Gen Z and millennials bearing the largest share of that impact.

The two-consumer divide is widening. Emerging markets, led by emerging Asia, remain a volume growth opportunity driven by people entering the consumer class. Mature markets can only achieve growth through premiumization and capturing affluent spending. The oil shock did not create this divergence, but it is accelerating it.

The next World Data Lab webinar takes place on 18 June, with a focus on the silver economy.