Cash-Strapped Latin Americans Showed Spending Restraint in Q1

Cash-Strapped Latin Americans Showed Spending Restraint in Q1

Consumer confidence in Latin America decreased two percentage points to an index level of 94 in the first quarter from Q4 2012, reflecting double-digit confidence declines in Colombia (-15) and Venezuela (-12), according to findings from the Nielsen Global Survey of Consumer Confidence and Spending Intentions. Confidence also declined in Argentina, falling three index points to 72. Brazil led the region with the highest index of 112, which increased one point from Q4, followed by steady consumer confidence performance in Peru (98). The index levels in Mexico and Chile increased three points each to 89 and 98, respectively.

The Nielsen Global Survey of Consumer Confidence and Spending Intentions measures consumer confidence, major concerns and spending intentions among more than 29,000 respondents with Internet access in 58 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

Latin Americans showed spending restraint in Q1 as discretionary purchase intentions for out-of-home entertainment, new clothes, home improvements and holidays all declined from the end of last year. One-fourth of Latin American respondents said they had no spare cash, an increase of one percentage point from Q4 2012.

“The decrease in Colombia’s score is attributed to a slowdown in economic activity since Q4 2012, concentrated in the industrial production and construction sectors,” said Felipe Urdaneta, country manager, Nielsen Colombia. “High unemployment, labor strikes and a new tax reform that was implemented at the beginning of this year are all combining to reduce the purchasing power of many Colombians.”

“This year started with strong political and macroeconomic difficulties for Venezuela,” said Pedro Manosalva, country manager, Nielsen Venezuela. “Since October 2012, monthly inflation increased between 2 and 3 percent. In February, Venezuela devalued the Bolivar by 32 percent against the U.S. dollar, its fifth currency devaluation in a decade. In March, President Hugo Chavez died after a battle with cancer. With 81 percent of Venezuelans saying they will restrain spending in the next 12 months, expect further belt-tightening measures to continue.”

“In Brazil, despite various attempts made by the government to infuse growth, the Brazilian economy remained flat,” said Eduardo Ragasol, country manager, Nielsen Brazil. “But a stable employment rate is keeping consumers confident that they can pay their debts and maintain spending levels to support their lifestyle needs.”

Other findings include:

  • Spending intentions in North America have increased since the beginning of the Great Recession in 2008.
  • Confidence in key Asian export economies rebounded strongly in Q1.
  • Consumer confidence in central and northern Europe increased in Q1, surpassing year-ago levels.
  • Consumer confidence in the Middle East/Africa region declined to the lowest level in three years.

For more detail and insight, download Nielsen’s Q1 2013 Global Consumer Confidence Report.

About the Nielsen Global Survey

The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Feb. 18-March 8, 2013 and polled more than 29,000 online consumers in 58 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America. 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%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or 10 million online population for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.