Southeast Asian consumer confidence remained strong in Q4 2014, with four Southeast Asian markets ranking in the top 10 most optimistic countries globally and five of six Southeast Asian markets registering a confidence index above 100 percentage points (consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism).
Indonesia held its position as the second most confident globally, despite dropping five index from Q3 to Q4 to 120. In the past quarter The Philippines jumped from third most confident to equal second (tied with Indonesia) with a consumer confidence score of 120 points (up 5 points quarter-on-quarter and one of the largest quarterly increases globally). Thailand ranked fifth globally with an index score of 111 (-2pp versus last quarter). Consumer confidence levels in Vietnam climbed in the past quarter (up 4 points to 106) while Singapore and Malaysia both recorded quarter-on-quarter declines – Singapore fell 3 points to 100 points and Malaysia declined 10 points to 89.
Vishal Bali, Managing Director of Nielsen’s Consumerization Practice in Southeast Asia, North Asia and Pacific, said: “Overall, consumers’ confidence levels across the region remain relatively stable. Consumers in Southeast Asia continue to be among the most confident nation globally.”
THE ECONOMY AND JOB SECURITY LINGER AS 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.
SAVING AND INVESTMENT CONTINUE TO BE 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%.
Bali noted: “These latest findings show consumers in Southeast Asia are conscientiously planning their financial future. 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.
CONSUMERS READY TO ADJUST SPENDING HABITS TO IMPROVE HOUSEHOLD SAVING
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.
“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,” observed Bali. “There is a collective sense of debt-avoidance in the region, and this is resulting in subdued purchasing of big ticket items.”
Insights contained in this article are taken from The Nielsen Global Survey of Consumer Confidence and Spending Intentions which was conducted between 13 August and 5 September 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.