James Russo, Vice President, Global Consumer Insights, The Nielsen Company
SUMMARY: While the emerging markets of Russia, United Arab Emirates, and Brazil suffered the biggest falls in consumer confidence over the past six months, there was no significant further decline in North American consumer confidence, which may signal the first cautious signs of hope that the recession is finally bottoming out. Fears of unemployment and job uncertainly reached new heights as job security was cited as the leading concern.
Global consumer confidence has plummeted to a record new low in the past six months, falling seven Index points from 84 in the second half of 2008 to 77 in the first half of 2009 according to the latest twice-yearly Nielsen Global Consumer Confidence Index, which tracks consumer confidence, major concerns and spending habits among 25,420 internet users in 50 countries.
|Confidence fell in 48 out of 50 countries…|
Indonesia topped Nielsen’s Global Consumer Confidence Index at 104 points, followed by Denmark (102 points) and India (99 points). The world’s most pessimistic nations in the Nielsen Index are Korea (31 points), followed by Portugal and Latvia at 48 Index points. Confidence fell in 48 out of 50 countries—Taiwan was the only country to buck the global trend, edging up three Index points from 60 to 63, although it is still 14 points below the global average.
The survey found that the emerging markets of Russia, United Arab Emirates, and Brazil suffered the biggest falls in consumer confidence over the past six months as currency devaluation, weakening export markets and falling global commodity prices took their toll. Consumer confidence plummeted by 29 Index points in Russia (down to 75 points from 104 in September 2008), marking the biggest fall in consumer confidence tracked by Nielsen globally, and UAE and Brazil both fell by 21 points.
|Latin America suffered the biggest consumer confidence hit regionally…|
And while six months ago, Latin America was the world’s most optimistic region, they have suffered the biggest consumer confidence hit regionally, falling 15 Index points (down to 82 points from 97). Consumer confidence in Europe and Asia Pacific also both fell by seven Index points.
While global consumer confidence plummeted to a new low, fears of unemployment and job uncertainly reached new heights. Job security was cited as the leading concern among Internet consumers in 31 of 50 countries surveyed. Global concern for job security rose to 22% globally from 9% in the latest round of the survey.
Six months ago, global consumers cited the economy and work/life balance as their two top concerns in life—but consumers’ priorities have rapidly changed along with the economic deterioration. Consumers who cited job security as their top concern in life today include those in Vietnam (36%), Spain (34%), Hong Kong (33%), Singapore (32%), Hungary (31%), China, India and Mexico (29%), and Italy (24%).
|The recession is finally bottoming out…|
Signs of hope
In the last six months, consumer confidence in the regions of Middle East/Africa and North America both declined by two and three index points, respectively. However, no significant further decline in North American consumer confidence may signal the first cautious signs of hope that the recession is finally bottoming out.
Specifically in the United States, while clearly adjusting their spending and savings—with 40% stating they are paying off debts and putting money into savings—American consumers are increasingly optimistic about a light at the end of the tunnel, with close to 20% seeing a recovery in the next 12 months, which is an improvement on the October 2008 results.
And while 77% of online consumers think their economy is in recession, China is the one exception where 65% of Internet consumers thought their economy is not currently in a recession. The Central Government’s stimulus package of US$585 billion equates to 13.3% of GDP and is an enormous shot in the arm for Chinese consumer confidence. February retail sales are still 15% up on last year and many Chinese Consumers now believe the next 12 months could be a good time to go back to investing in stocks and property. Chinese consumers are also maintaining their love affair with travel during the economic slowdown and top the list of markets surveyed by Nielsen when it comes to their intention to spend spare cash on travel.
As interest rates continue to fall, consumers appear to be less concerned with paying off their debts and more interested in bolstering their savings accounts. Nearly half (48%) of global consumers said they were putting any spare cash they had into savings while 32% were using spare cash to pay off debts, credit cards and/or loans, up from 30% in October 2008. Nine of the top 10 markets putting their money into savings hailed from the Asia Pacific region.
|Economic recovery in Europe will be longer and slower to take effect…|
Europe remained the world’s most pessimistic region at 70 Index points, seven points below the global average, a clear indication that economic recovery in Europe will be longer and slower to take effect. Within Europe, consumer confidence in Hungary suffered the biggest fall by 19 Index points, followed by Latvia (-17 points) and Finland (-15 points).
Among global online consumers who believe they’re currently in a recession, 52% said they were bracing themselves for a global recession to last 12 months or longer. One in two consumers isn’t expecting any miracles for a quick rebound—steady but stable is probably the best approach they are hoping for.
Recovery is imminent
Not everyone is prepared to suffer a prolonged recession, however. Some consumers are already planning their post-recession party. Among current recessionistas, nearly one in five (23%) online consumers believes their country will be out of recession within the next 12 months, spearheaded by the Vietnamese (60%) and Indians (56%). Two in five Danish and Dutch consumers also believe they’ll be out of recession within a year, along with one in three consumers in Austria, Sweden, Norway, Russia, Indonesia, Israel, Mexico and the UAE.