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7 January 2010
Mumbai, India
Worldwide the economy is emerging from recession and in some markets the recovery is accelerating, according to the latest Nielsen Global Consumer Confidence Survey released today. Results of the Nielsen survey showed that confidence gains in markets recovering fastest from recession – including Hong Kong, China, Singapore, India and Brazil – have fueled renewed willingness to spend by many consumers as they head into 2010. Though consumer confidence has dropped slightly in India it still ranks second with 117 index points behind Indonesia (119 points) in the recent round of the survey.
Globally Consumer Confidence has remained stable (87%) with a point increase compared to the last leg of the survey in quarter three of 2009. The Nielsen survey, which tracks consumer confidence, major concerns and spending habits, was conducted among more than 17,500 Internet users in 29 markets between December 4 -18, 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 shows global economic recovery is heading in the right direction.
However, in the last quarter of 2009, Indian consumers have become more conscious of a full economic recovery in a year. Nearly half of the Indian consumers think that the country is in an economic recession at the moment. 58 percent of these said that India will be out of economic recession in the next twelve months.
“In quarter three of 2009 consumers had started believing that the worst was over, but runaway food prices and high grocery bills have put the cautious optimism back in them. They are still worried about the time it will take for things to get better. Until the consumers are reassured that recovery is going to accelerate and they can finally call economic slowdown a thing of the past, they are going to be cautious,” said Vatsala Pant, Director, Client Solutions, The Nielsen Company.
While eight of the top 10 most confident markets in the fourth quarter of 2009 came from Asia Pacific, including emerging markets Indonesia and India, consumers in two of Asia’s most developed markets, South Korea and Japan, were the least confident. Brazil (ranked 3rd) and Canada (ranked 10th) were the only countries outside of Asia to make the top 10. Hong Kong recorded the highest consumer confidence increase for the second consecutive quarter in Q4 – up seven index points from 93 in Q3 2009 to 100 (on a scale of 0 to 200 Index points) in Q4. Confidence in Hong Kong rose to a total of 21 points since June 2009.
United Arab Emirates posted the biggest fall in consumer confidence (from 102 points in Q3 to 92 in Q4) – a result of the Dubai financial meltdown towards the end of 2009.
Indians – the most optimistic
Seven out of the top 10 most optimistic markets about job prospects in 2010 come from Asia, spearheaded by India where 83 percent of consumers are optimistic about job prospects, followed by 70 percent of Indonesians. 17 percent Indians think that job prospects in the country will be ‘excellent’ and 66 percent think that it will be ‘good’ in the next twelve months.
However, things are slightly glum where personal finances are concerned. The percentage of Indians who are optimistic about the state of their personal finances in the next twelve months has gone down by 3 percent to 78. 12 percent think that personal finances will be ‘excellent’ and 66 percent think it will be ‘good’. Indians are still second behind Indonesia in their optimism over personal finances.
Decreasing confidence in the state of their personal finances is affecting Indian’s willingness to spend. Considering the cost of things today and their personal finances only 3 percent Indians think that it is an ‘excellent’ time to buy the things that they want and need and 38 percent think that it is a ‘good’ time to make purchases. In the last round 51 percent Indians thought that it was an appropriate moment to buy things, in the fourth quarter 41 percent think the same.
“Indians are wary of spending at present as their optimism in the state of their personal finances has gone down. They would rather hold on to their non-essential item purchases than repent later if the situation becomes worse,” said Pant.
How do Indians utilize spare cash?
Indian consumers are cautious over their discretionary spending. After meeting the necessary living expenses Indians put their spare cash into Savings (65%). This has been the favourite mode of spare cash utilization for Indians for some time now and in the latest round of the survey has become dearer to Indians by one percent.
In the latest round of the survey, Indians have become more watchful of investing in the stock market. The percentage of Indians who will put their spare cash into Shares of stock/ mutual funds has gone down by four percent to 40 compared to the last round of the survey.
After saving and investing, Indians like to put their spare cash into new technology products (33%). Surprisingly Paying off debts/ credit card loans has gone down in importance for Indians (30%). Home improvements/ decorating (32%), new clothes (31%), and Holidays/ vacations (31%) have taken its place. After clearing their debts, a quarter of Indians would put their spare cash into Retirement fund and nearly two in ten Indians would spend on Out-of-home entertainment.
“Saving for the rainy days has been ingrained into Indians financial planning and it has not seen any change over the years. But consumers have loosened their purse and are planning holidays and vacations and home improvements in 2010, which had taken a back seat all through 2009 due to the economic downturn in the country,” said Pant.
Major concerns
Increasing food prices has beaten all other concerns and is the biggest concern (17%) for Indians in the fourth quarter of 2009. In India, where food accounts for 58 percent of household expenditure compared with only 10-15 percent in the wealthiest Western countries, rising food prices is becoming a major concern and affecting Indian consumers’ spending power.
Job security has again become an issue and it follows increasing food prices in the list of concerns (13%). Work life balance is third on the list with 12 percent Indians worrying about it. In the last round work life balance was the biggest concern for Indians with 15 percent votes.
On the back of the Copenhagen Summit, Indian concern over Global Warming has gone up by 3 percent to 10 and their concern over the Economy has gone down to 9 percent from 12 in quarter three.
Other concerns bothering Indians are Terrorism and Children’s education and/or welfare (both 6%), Health and Parent’s welfare and happiness (both 5%), Debt and Increasing utility bills (both 4%), Political stability and Increasing fuel prices (both 2%), War, Crime, Tolerance towards different religions, and Tolerance towards other countries’ values (all 1%).
“As expected rising food prices has become the most important and urgent issue to grapple with for Indians. The signs were visible in the last round of the survey itself. It is also interesting to see how everywhere the focus shifts to money and sources of money, like a job, when the cloud of recession hangs over consumers and shifts back to work life balance and less immediate ‘economy’ when things look up. Similar consumer behaviour can be seen in India,” said Pant.
About the Nielsen Global Consumer Confidence Survey
The Nielsen Global Consumer Confidence Survey was conducted between December 4 -18, 2009 and polled over 17,500 consumers in Asia Pacific, Europe, Latin America, the Middle East and North America about their confidence levels and economic outlook. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications. The privately held company is active in more than 100 countries, with headquarters in New York, USA. For more information, please visit, www.nielsen.com
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