Insights

Political instability and rising food prices cause confidence levels to dip in many Southeast Asia markets in Q2 2014
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Political instability and rising food prices cause confidence levels to dip in many Southeast Asia markets in Q2 2014

Consumer confidence across a number of Southeast Asia markets has taken a minor dip in Q2 2014, while the Philippines bucked the trend, jumping four points in the latest quarter, according to Nielsen’s Q2 2014 Global Survey of Consumer Confidence and Spending.

While Southeast Asian consumers remain among the world’s most optimistic, they have been less bullish in recent months in the face of escalating political instability around the region and rising food prices — the economy, job security, political stability and food prices feature prominently in Southeast Asian consumers’ list of key concerns in the latest quarter.

Four of the six Southeast Asia markets covered in the survey show confidence levels declining between Q1 and Q2 2014, with Thailand posting the region’s largest decline, down three points quarter-on-quarter to 105. Indonesia’s confidence index score was the second-highest globally despite dropping one point to 123 points in Q2 2014, while Vietnam and Singapore also dropped one point quarter-on-quarter, both posting a score of 98 points. Conversely, the Philippines and Malaysia saw increases in confidence between Q1 2014 and Q2 2014. The Philippines jumped four points to 120 (the third-highest score globally) and Malaysia was up one point to 93. Globally, consumer confidence rose slightly to 97 points in Q2 2014, up one point compared to Q1 2014.

Eighty-five percent of consumers in Indonesia perceive the state of their personal finances over the next 12 months as good or excellent, as do 80 percent of consumers in the Philippines. Consumers in Thailand, Singapore, Vietnam and Malaysia were less optimistic – 62 percent of Thais perceive the state of the personal finances over the next 12 months to be good or excellent, as do 55 percent in Singapore, 53 percent in Vietnam and 50 percent in Malaysia, compared to 56 percent globally.

“In 2014 the Philippines is enjoying a surge in consumer confidence thanks to a strong economy, positive outlook and an expanding middle class population, and this is reflected in their strengthening quarter-on-quarter confidence levels,” notes Vishal Bali, Managing Director of Nielsen’s Consumerization Practice in Southeast Asia, North Asia and Pacific. “Elsewhere in Southeast Asia we are still seeing relatively strong consumer confidence, with all but Malaysia sitting above the global average, however, it appears that consumers’ lack of clarity on the political front is creating some nervousness, while rising food prices are causing consumers to tighten their belts and look for ways to keep their household expenses in check.”

SOUTHEAST ASIAN CONSUMERS FOCUSED ON CURBING HOUSEHOLD EXPENSES

Consistent with their cautious confidence levels, consumers in Southeast Asia are committed to building up a nest egg for the future. Across the six Southeast Asia markets, channelling money into savings tops the rankings for how consumers utilise their spare cash after covering essential living expenses.

Southeast Asian consumers are also conscious of their outgoings, particularly in Thailand where more than nine in 10 (92%) have changed their spending in the past year to save on household expenses. In Vietnam, 85 percent of consumers have changed their spending to save on household expenses, as have 80 percent in Malaysia and the Philippines, 79 percent in Indonesia and just 58 percent in Singapore, compared to 64 percent globally. When it comes to keeping their household expenses in check, limiting spending on new clothes is the most common focus for Southeast Asian consumers, along with cutting down on out-of-home entertainment and trying to save on gas and electricity.

“Income levels across the region have increased exponentially and more and more Southeast Asian consumers are joining the ranks of the middle class,” observes Bali. “But as their incomes increase, these middle class consumers are becoming more conscious of how they manage their day-to-day and long-term financial matters, with a focus on saving for the future, carefully managing their spending and keeping debt at a manageable level. For brands looking to grow their share in Southeast Asia, it is important to develop a range of products and services which provide good value for money.”

Insights contained in this article are taken from The Nielsen Global Survey of Consumer Confidence and Spending Intentions which was conducted between 12 May and 30 May 2014 and polled more than 30,000 online consumers in 60 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America.

To access the complete global results click here now, or for more information contact Nielsen.