SINGAPORE – Southeast Asian consumer confidence remains strong in Q4 2014, with four Southeast Asian markets ranking in the top 10 most optimistic countries globally, according to the latest Consumer Confidence Index released by Nielsen, a global information and measurement company. The Nielsen Global Survey of Consumer Confidence and Spending Intentions also reveals five of six Southeast Asian markets register a confidence index above 100 percentage points (pp). Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.
Consumers in Indonesia remain the second most confident globally, with an index score of 120 in Q4 2014 (-5pp compared to previous quarter). Philippines tied in second place with a consumer confidence score of 120 points (+5pp per last quarter, one of the largest quarterly increases globally). Thailand came in fifth with an index score of 111 (-2pp versus last quarter). Consumer confidence levels in Vietnam (106 points, +4pp) and Singapore (100 points, -3pp) also remain relative strong.
In contrast, consumer confidence in Malaysia stood at 89 points, which was down 10 percentage points on Q3, the largest quarter-on-quarter decline globally and seven points below the global average of 96 points. (See Chart 1).
“Overall, consumers’ confidence levels across the region remain relatively stable,” observed Vishal Bali, Managing Director of Nielsen’s Consumerisation Practice in Southeast Asia, North Asia and Pacific. “Consumers in Southeast Asia continue to be among the most confident nation globally.
The only exception is Malaysia which recorded the lowest confidence level since Q2 2009, likely due to consumers feeling the pressure of the introduction of GST later this year and uncertainty around any potentially impact on the price of goods and the cost of living.”
The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns, and spending intentions amongst more than 30,000 respondents with Internet access in 60 countries.
The Economy & Job Security – Top Concerns
Economic conditions remain a key concern for consumers, with close to one in five consumers in the region (18%) citing the economy as their biggest concern over the next six month. Consumers in Thailand (49%) and Malaysia (38%) are the most concerned globally while about a third of consumers in Indonesia (33%) and Vietnam (28%) share the same concern. This compared to 25% of consumers globally.
Job security ranks as the second biggest concern for consumers in Southeast Asia (14%), particularly in Singapore (28%), Thailand (28%) and Vietnam (27%). Other major worries in the region include work/life balance, health and increasing fuel prices. (See Chart 2).
Saving & Investment still a Priority
Southeast Asian consumers are among the world’s most avid savers, and more than two thirds (69%) channel their spare cash into savings, compared to just 48% globally.
Consumers in Vietnam are the highest globally (77%) when it comes to savings, and Indonesia ranks third globally (70%). Consumers in Malaysia (67%), Philippines (63%), Thailand (63%) and Singapore (62%) follow closely.
Besides savings, about a third of Malaysians (33%), Indonesians (32%) and Thais (30%) are channelling their spare cash into stock/mutual funds, while consumers in Philippines (32%) and Singapore (31%) are focused on clearing their debts and loans. Almost one in four of Singaporeans (24%) and Malaysians (22%) allocate spare funds to building their retirement fund – double the global average of 11%.
“These latest findings show consumers in Southeast Asia are conscientiously planning their financial future,” notes Bali. “With disposable income being more readily available than ever before, consumers across the region have the means to invest their spare cash and strengthen their savings, which is driving greater demand for banking and finance services.”
While establishing financial security takes centre stage for consumers in the region, nearly half of Singaporeans (49%) and about two in five consumers in Thailand (44%), Indonesia (40%), Vietnam (40%) and Malaysia (39%) are splashing out on holidays. A further one-third of consumers in Philippines (35%) and Vietnam (35%) spend their spare cash on new clothing. (See Chart 3).
Consumers ready to Adjust Spending
The Nielsen survey also revealed that four out of six markets (Thailand, Malaysia, Indonesia and Vietnam) in the region think their country is going through an economic recession, and at least eight in 10 consumers in Thailand (88%), Vietnam (86%), Malaysia (85%), Indonesia (80%) and Philippines (80%) have adjusted their spending habits over the past 12 months in a bid to curb household spending.
More than six in 10 consumers in Malaysia (65%) and Philippines (62%) are spending less on new clothing, while 60% of Vietnamese and 56% of Thais and Malaysians have cut down on out-of-home entertainment in their effort to reduce household expenses. Other areas where consumers are cutting back include delaying upgrading of technology, switching to cheaper grocery brands, saving on gas and electricity usage and reducing holidays and short breaks. (See Chart 4).
“While consumer confidence is relatively stable across Southeast Asia, consumers are expressing concern around areas such as job security and economic health, and as a result they are cautious with their spending,” notes Bali. “There is a collective sense of debt-avoidance in the region, and this is resulting in subdued purchasing of big ticket items.”
