Asia-Pacific Consumers Ready to Spend Their Way Out of Recession

The Nielsen Global Consumer Confidence Index latest global survey revealed an increase of 6 points compared to the survey conducted 6 months ago. This result clearly implies that consumers are ready to spend again. This mentality drove the global index up to 92 points, which is close to the prerecession 2007 third quarter result of 94 index points. The financial system downfall in 2009 reflected 77 points. Overall, the results were favorable with 41 out of the 55 countries increasing their consumer confidence. India and Indonesia and Norway where among the most confident nations with 127,116,115 points respectively.

Asia Pacific’s remedy to recession

Asia Pacific is the highest among all regions in terms of purchasing confidence with a (+8) points. This rally is spearheaded mainly by Taiwan and Singapore who garnered (+14) and (+11) points respectively. India gained (7+) and China (+6) which is an optimistic sign for the two emerging economic market forces. Chinese confidence soared to 108. A figure they matched in the first quarter of 2005. Vietnam was the odd one out when its consumer confidence scored lower than the previous survey conducted 6 months ago. This is attributed to the 8.51 percent price increase on goods.

Dr. Venkatesh Bala, chief economist at the Cambridge Group, a part of The Nielsen Company stated, “Asia`s rapid recovery and bright prospects makes this booming region a high priority for resource allocation for manufacturers and retailers, including tapping into the large and growing number of middle-class consumers.”

Christopher Cambournac, president of the Nielsen Company`s Asia Pacific, Middle East and Africa region stated that Asia Pacific consumers’ results showed evidence that they are shopping more. Consumers have demonstrated plans to purchase out-of-home entertainment, technology, holiday getaways and new clothes.

Hong Kong’s response

According to Nielsen, Hong Kong consumers are very optimistic and they plan to spend on recreation expenses such as vacations and entertainment. The city’s consumer confidence is improving on a yearly basis. Although consumers generally still want to put money away, the index reported a rise from 70 points to 99 points in consumer confidence. Of the local residents, 53 percent also expressed confidence in the stock market, mutual funds and other investments. Hong Kong is one of the premier cities whose spending outlook has sparked a new energy. They are confident that the economy will bounce back. The Nielson results revealed 47 percent of the consumers are ready to spend on vacations, 37 percent on other recreational activities, 37 percent on clothes and 27 percent on electronics.

The managing director for Nielsen Company in Hong Kong, Oliver Rust, reminded us that, “Although consumers’ intent to spend has improved, we still need to remain cautiously optimistic about the future, especially given the high dependency on mainland tourist spending, and the fact that some frugal consumers have yet to return to their 2008 shopping behaviour.” He further added that the, “Asia pacific region is on a high and businesses are looking their way to invest in a place where consumers are willing to pay for quality and innovation.”

The rest of the world

Overall, Europe increased by 2 points but it is clear that they are in a different state of mind as 7 markets out of the 28 marked a decline in consumer confidence. The top markets, Italy and Germany, did not save Europe and did not escape consumer pessimism as the index dropped by 3 points from the previous survey score. In the UK, 84 percent of respondents believe that they are still experiencing recession in the first quarter. This is lower in comparison to the 94 points taken six months ago. Spain’s score of 79 is five points higher than previous results, however, France increased by only one drawing their index level to 68.

Greece tallied the biggest decline with 15 points. This is due to the surprising debt crises that affected financial markets in Europe and Asia. Meanwhile, U.S. confidence scores were up one point from the previous quarter. Canada remained steady at 100. Overall, it is looking great for the rest of the world since the the percentage of consumers who believe they are in recession had declined to 58 percent compared to the previous year’s 77 percent.

Nielsen Global Consumer Confidence Survey

Nielsen`s Global Consumer Confidence Index tallies their results from 27,000 online respondents in 55 countries within Europe, Asia Pacific, Latin America, Middle East and North America. The Global Consumer Confidence Survey was held from March 8 to 26 this year. The survey intends to measure consumer spending habits, present financial standing and perception of the job market. The sample is taken from internet users from different countries. Respondents are also classified according to age. The survey has a margin of error of ±0.6 percent.

MasterCard’ version

Nielsen’s result seems to coincide with MasterCard’s own Worldwide Index of Consumer Confidence. In their results released in May this year, Asia-Pacific consumer’s exhibit optimism in terms of their country’s attempted rebound. From the fourteen market participants, eight showed a favourable consumer outlook.

The survey also demonstrates that age may influence consumer confidence. Younger consumers which were aged below 30 seemed to show more optimism. This can be noticed on the point difference in countries like the Philippines, Hong Kong, Singapore, and New Zealand. Korea proved to be the exception as their respondents above 30 were more optimistic. The MasterCard Worldwide Index of Consumer Purchasing Priorities is a survey that measures five components that affect the economic climate. These are employment, regular income, stock market and quality of Life. The respondents are presented with a scale where 100 points reflects optimism, 50 represents neutrality and 0 represents pessimism. The Index does not focus on the actual economic condition but is mainly concerned with the personal views and reactions of the respondents to the different elements.

The economic advisor for Asia-Pacific at MasterCard Worldwide, Dr. Yuwa Hedrick-Wong, firmly believes the consumers of this region are ready to spend on personal discretion and move a step back from precautionary sav-ings, even if the story was different 18 months ago when the same consumers were amongst the first to tighten their belts on discretionary savings. “This stability of consumer confidence and rising consumption in Asia/Pacific therefore bodes well for stronger business investment through the rest of the year, thereby contributing to the momentum of recovery.”

Singapore’ stance

In Singapore, The MasterCard Consumer Index indicates an increase in consumer confidence compared to the previous survey conducted in 2008. The general view however is still conservative when it comes to spending. They remain cautious, but they are still willing to spend on electronics (37 percent) and air travel (35.2 percent).

“Consumer sentiment here fell precipitously in 2008 and early 2009, but it is now seeing a V-shaped rebound. Persistent uncertainty in the outlook of the global economy, however, continues to affect consumer savings and spending behaviour, which show that most consumers are still saving for precautionary reasons,” Dr. Yuwa Henrick-Wong, stated.

He also went on to say, “For the Asia Pacific region as a whole, the robust recovery in both economic conditions and consumer sentiments can therefore be characterised only as a ‘partial decoupling’ from the rest of the global economy.”