Myanmar, Vietnam and India’s consumers extremely optimistic about the future

For the first time since 2012, consumers in Asia Pacific are not optimistic about the immediate future, according to the recently released MasterCard Index™ of Consumer Confidence (H2 2015).

Between November and December 2015, 8,779 respondents, aged 18 to 64 in 17 Asia Pacific markets, were asked to give a six-month outlook on five economic factors including the economy, employment prospects, regular income prospects, the stock market and their quality of life. The Index is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.

Asia Pacific has fallen below the 60 point optimistic mark to neutral, with 12 of the 17 markets seeing a deterioration in confidence levels. Stock market sentiment was the key driver of the decline followed by prospects for employment. The biggest decline in optimism levels was seen in Sri Lanka, followed by Singapore, and Taiwan.

Myanmar, Vietnam and India on the other hand are extremely optimistic in their outlook for the next six months. For Myanmar and Vietnam, this was boosted by big improvements in stock market sentiment which rose by 21.6 points and 17.3 points, respectively. Consumer confidence in India stayed stable with consumers maintaining their extremely optimistic outlook.

“The decline of consumer confidence in Asia Pacific reflects the continued uncertainty in the global economic environment. In particular, recent stock market turbulence has significantly impacted consumer outlook. However, a number of emerging markets are bucking this trend, namely, Myanmar, Vietnam and India, which are all continuing to see strong economic growth. So while Asia Pacific’s overall confidence has dampened and growth has slowed, its markets will still play a key role in driving global growth in 2016,” said Eric Schneider, Region Head, Asia Pacific, MasterCard Advisors.

According to the index, Asia Pacific markets overall saw a deterioration in confidence, falling 6.4 points to 59.7 points in H2 2015 from 66.1 points in H1 2015. Eight of the 17 markets surveyed now fall below the 50 point neutral mark compared to four in the previous survey conducted in H1 2015.

The index observed declines across all five key economic indicators for Asia Pacific: stock market (-10.8 to 52.0), employment (-7.1 to 59.8), economy (-6.7 to 56.2), quality of life (-4.7 to 57.4) and regular income prospects (-2.9 to 72.9).

Declines were recorded in 12 out of 16 Asia Pacific markets, with extreme deterioration in Sri Lanka (-25.2), Singapore (-20.9) and Taiwan (-20.6). The decreases recorded in Korea, Malaysia, Malaysia and Taiwan moved these markets from neutral into pessimistic territory, while Australia – the only pessimistic market in the previous survey – moved from pessimistic to neutral.

However, consumers in the emerging markets of Myanmar, Vietnam and India however are extremely optimistic about economic prospects over the next six months, with Myanmar showing the biggest improvement.  Compared to H1 2015, only Myanmar (+14.1), Indonesia (+12.2) and Vietnam (+7.3) out of the 16 Asia Pacific markets surveyed recorded a greater than 5 point improvement in consumer confidence.

  • Consumer confidence in both China (74.6) and Hong Kong (44.4) posted significant declines of 11.3 points and 16.8 points, respectively. Confidence in the stock market plummeted by 40.6 points in Hong Kong and had the most negative impact on the country’s overall score. Comparatively, China only suffered a 15.1 point drop in stock market sentiment despite the volatility in the Chinese stock market since the middle of 2015.
  • Taiwan (28.9), which showed extreme deterioration from six months ago, also saw a decrease in confidence in the stock market (-28.4) and employment (-24.2), and now has the lowest score in the region.
  • While Thailand’s consumer confidence remains in optimistic territory (66.6) despite a drop of 6.1 points, sentiment is at its lowest level since late 2011.
  • Singapore (44.3) moved from optimistic into neutral territory after falling 20.9 points, led by extreme deterioration in stock market sentiment (-32.8), the economy (-26.9) and employment (-20.1).
  • India’s consumer confidence remains in extremely optimistic territory (90.2) with only a 2.9 point decline from the last survey. Bangladesh (67.3) saw some deterioration (-8.0) but its overall score remains optimistic.
  • Sri Lanka (42.2) showed the greatest decline in confidence levels of all markets surveyed with a 25.2 point drop, with all indicators suffering more than 20 point losses except for regular income which fell by a relatively smaller margin (-7). The depreciating rupee which has contributed to rising inflation has dampened the outlook in Sri Lanka.
  • Australia (42.4, +2.9) and New Zealand (52.0, -5.7) remain relatively stable although New Zealand suffered a deterioration of 17.5 points in their optimism levels for employment.

 

Source: Fintech Innovation

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