Asia consumers glimpse end of recession
- Consumer confidence heads north in Asia, except Japan and Korea
- HK and Chinese consumers look to spend more on travel
- India consumers worried about rising food prices
- Singaporeans remain cautious with their money
Asia - Consumer confidence is on the rise in Asia, but are consumers ready to spend?
According to a recent Nielsen survey, confidence gains in markets recovering fastest from recession - including Hong Kong, China, Singapore, India and Brazil - have fuelled renewed willingness to spend by many consumers as they enter into 2010. More consumers are increasing savings and stock market investments, as well as spending more on "luxuries" like entertainment, clothes and vacations, the survey said.
Eight of the top 10 most confident markets in the fourth quarter of 2009 came from Asia Pacific, including emerging markets Indonesia (ranked 1st) and India (ranked 2nd). South Korea and Japan however, were the least confident.
Hong Kong recorded the highest consumer confidence increase for he second consecutive quarter in Q4 - up seven index points from 93 to 100 (on a scale of 0 to 200 points). Confidence in Hong Kong rose a total of 21 points since June 2009.
"The Nielsen survey shows that in the past six months, consumers have become more optimistic about their countries emerging from recession with better job prospects and personal finances. This is another sign that global recovery is heading in the right direction," said James Russo, VP of global consumer insights at The Nielsen Company.
"However, while purse strings may be loosening in some markets, there is clearly a big difference in the pace of expected recovery between the emerging and developed markets, and consumers' increased confidence is not yet translating into a widespread readiness to start spending."
Eighty-three percent of Chinese, 73% of Hong Kong and 60% of Singaporean consumers believed their economies exited the recession in the fourth quarter of last year. This compares to the 90% of consumers in Mexico, the US and UK who felt their economies were still deep in recession in the quarter.
Asia was also found to be leading the way in creased discretionary spending. Chinese consumers topped global rankings for investing in stocks and mutual funds 57% and new technology products 44%, and are ranked second globally for spending on new clothes (53%) and holidays (50%).
Hong Kong consumers are also beginning to spend on out-of-home entertainment, new clothes, new technology and holidays, the survey found.
Spending in India however, is hampered by concerns over rising food prices. "Although the Indian economy is expected to grow in 2010, India has experienced a bad monsoon season resulting in increased food prices and higher grocery bills for consumers. This has had an immediate impact on consumer confidence and the availability of discretionary income," Russo said.
Consumers in Singapore, however are remaining cautious with their money despite confidence levels rebounding to levels last seen in 2008, said a recent MasterCard survey.
Consumers in Singapore are now more focused on putting extra cash away compared to six months ago. More respondents said they are planning to increase the amount they are saving in the first half of 2010 (45.8%) compared to six months ago (34.2%). Forty-five percent said they were planning to save the same amount versus 54.4% in the last survey.
Of those who said they would save more or the same amount, the top reason cited was to be prepared for unforeseen emergency expenditures due to an uncertain economic outlook (72.8%). Consumers here are also saving to purchase consumer electronics (37.9%) and international personal air travel (35.2%).
Dr Yuwa Hendrick-Wong, economic advisor of Asia Pacific, Middle East and Africa, MasterCard Worldwide said: "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 consumers' savings and spending behaviour, which show that most consumers are still saving for precautionary reasons.
"For the Asia Pacific region as a whole, the robust recovery in both economic conditions an consumer sentiments can therefore be characterised only as a ‘partial decoupling' from the rest of the global economy," he said.
Twenty-eight percent of Singaporean consumers plan to save between 11-20% of their income in the next six months. Twenty-one percent plan to save between 21-30%.
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