Asia Pacific still the world’s most optimistic region, but recessionary sentiment starting to brew

Third quarter consumer confidence fell in 10 out of 14 markets across region
Consumer spending likely to be restrained over coming 12 months
Those with spare cash looking to put into savings, invest in stocks/mutual funds

SINGAPORE – The Asia Pacific region, along with Latin America, was the world’s most optimistic region in the third quarter of 2011, according to the latest online consumer confidence findings from Nielsen, a leading global provider of insights and analytics into what consumers watch and buy. The region also continued to dominate the list of most optimistic countries globally – seven of the top 10 highest consumer confidence scores hailed from this region (India, Indonesia, Philippines, Thailand, China, Hong Kong and Malaysia).


On average, the Asia Pacific consumer confidence index declined one point quarter-on-quarter to a score of 97, representing the second consecutive quarterly decline in 2011.

Of the 14 markets measured in the region in the third quarter, 10 posted quarter-on-quarter declines (Singapore and Malaysia had the biggest drops of 9 points each), while 4 posted gains (Thailand, Indonesia, New Zealand and Japan).

“Asia Pacific remains the most confident region in the third quarter, even as consumers here are signaling the start of a potential recessionary mindset – 1 in 2 consumers in the region now believe their country is in a recession. This mindset will set the stage for more careful discretionary spending by consumers until there is more clarity on the economic fortunes of countries in Europe and the US,”

said Therese Glennon, Nielsen’s Managing Director (Consumer Insights and Innovation) in Asia Pacific, Middle East and Africa.

Globally, consumer confidence fell 1 point to an index of 88, the seventh consecutive quarter of decline. Confidence scores also dropped in 31 of 56 global markets measured. Consumer Confidence Index levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

In this latest study, Nielsen polled over 28,000 online consumers in 56 countries (more than 7,000 in the Asia Pacific region) about their outlook on jobs, the economy and readiness to spend. The key highlights for the Asia Pacific region are discussed below:

Spending likely to be restrained over coming year:

Retailers and manufacturers are set for a more difficult time over the next 12 months, as consumers show more reluctance to spend in the third quarter. Nielsen’s analysis shows that 62 percent of consumers in Asia Pacific believe the next 12 months will not a good time /will be a bad time to buy the things they want and need. This is an increase of 3 percentage points over Q2, and 5 percentage points over Q1 2011.

“Not only will consumers exercise more restraint over their wallets and purses when it comes to spending, they will also look for more value when purchasing everyday items such as groceries.

In a climate where the economic outlook is making consumers nervous, the winners will be those retailers and manufacturers that are able to offer innovation and value to meet the needs of consumers,” said Glennon.

Consumers are also just beginning to adopt a recessionary mindset – 50 percent of consumers in Asia Pacific believe their countries are now in recession (up 5 percentage points and 13 percentage points over Q2 and Q1 2011 respectively).

Consumers in Asia Pacific continue to be big savers and “bullish” on investing

The region boasts the largest percentage of savers globally. Of those with spare cash, 61 percent (up 2 percentage points over Q2) indicated they plan to put some spare cash into savings, making savings the most popular use of spare cash. In contrast, the global average was 46 percent.

1 in 3 (33%) consumers also said they plan to invest in mutual funds/stocks, almost double the global average of 18 percent.

Consumers in Asia Pacific still the most positive about job prospects

For consumers in Asia Pacific, the perception of job prospects over the next 12 months did not change significantly compared to the second quarter. 1 in 2 (56%, down 1 point from previous quarter) Asia Pacific consumers described their job prospects in the next 12 months as “excellent/ good”.

In contrast, consumers in other regions are significantly less positive. 47 percent of consumers in Latin America believe their job prospects are “excellent / good”, while the percentage in Middle East/Africa, North America and Europe is 45 percent, 28 percent and 26 percent respectively.

The economy became consumers’ biggest concern in the Asia Pacific – local companies well positioned to offer value

Rising food prices, work-life balance and the economy were the top 3 concerns during the second quarter of 2011. However, the economy replaced rising food prices as the biggest concern in the third quarter, with work-life balance remaining in second place.

“The Asia Pacific region is still global manufacturers’ best growth bet as pressures continue to mount in the US and parts of Europe. At the same time, these global companies will face increasing competition from strong local and regional manufacturers who are less exposed to the global economic conditions and who are learning to innovate at a faster pace while offering value. More than ever, providing relevance and value-add will be key to capturing consumers’ discretionary spending,”

Glennon said.