Achche din aagaye hain, Consumer confidence rises in India: Nielsen study

07 May,2014


It appears the ‘achche din’ have already arrived in India. Consumer confidence in Asia-Pacific increased in eight of 14 markets in the first quarter even as it was flat in three and declined in three markets. The region’s biggest quarterly index increase was six points, in both India (121) and Hong Kong (111). India’s index rise returns the score to a fourth-quarter 2012 level after several quarters of declining performance.


Consumer confidence in the Philippines (116) and Thailand (108), as well as Indonesia (124) and China (111), were among the highest index scores of the 60 countries measured.


“In India, the overall perception about the economy has achieved a steady state as many believe that things cannot get worse and that investments will pick up as the Indian fiscal year-ends and most households expect the positive impact of year-end bonuses,” said Piyush Mathur, president, Nielsen India. “However, inflation continues to be a challenge, and there is a sense of cautious anticipation about the outcomes of the world’s largest democratic election. Despite these factors, discretionary spending intentions are slightly more buoyant than previous quarters, as is typical at the end of the financial year, and in good time for the summer holiday season.”


“In China, we see stronger confidence among respondents in Tier 2 and Tier 3 cities, compared with those in Tier 1,” said Yan Xuan, president of Nielsen Greater China. “In these lower tier locations, consumers have higher average salaries than their counterparts in lower tier locations, and they have less work and life pressures than those living in Tier 1 cities. Consumers in the middle tier cities also demonstrate a greater willingness to purchase more premium products. The continued rise of the Chinese middle-class throughout the country bodes very well for China’s goal to grow its GDP through more domestic consumption, rather than solely rely on infrastructure investment and export.”


Discretionary saving and spending intentions in the Asia-Pacific region increased across all categories measured. The region boasted the most prolific savers, with 67 percent putting spare cash into savings accounts-an increase of 7 percentage points compared to fourth-quarter 2013. Investing in shares of stocks and mutual funds (38%) was also up 7 percentage points in the first quarter. Spending intentions increased for new clothes (+6 percentage points), home improvement projects (+6pp), holidays/vacations (+4pp), out-of-home entertainment (+3pp) and new technology (+3pp), compared to fourth-quarter 2013.


Meanwhile, global consumer confidence returned to a pre-recession level with an index score of 96 in the first quarter-the highest score since first-quarter 2007, according to consumer confidence findings from Nielsen, a leading global provider of information and insights into what consumers watch and buy.


The global index score represents a two-point increase from fourth-quarter 2013 and a three-point increase from a year ago (Q1 2013). The Nielsen consumer confidence index measures perceptions of local job prospects, personal finances and immediate spending intentions. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.


Regional consumer confidence was highest in Asia-Pacific with an index score of 106, a one-point increase from the previous quarter (Q4 2013) and a three-point increase from a year ago (Q1 2013). North America posted the largest quarterly increase of five points to reach the optimism baseline of 100-the highest level since 2007. The Middle East/Africa region increased four points to 94, and Europe rose two points to 75, compared to fourth-quarter 2013. Latin America reported the only quarterly regional consumer confidence decline, falling one point to 93.


In the world’s biggest economies, consumer confidence increased six points in the U.S. (100), remained flat in China (111), increased one point in Japan (81), increased four points in Germany (99), increased eight points in France (59) and increased three points in the U.K. (87).


“With global consumer confidence at a seven-year high, it marks a significant milestone for the longest recession since the Great Depression,” said Dr. Venkatesh Bala, chief economist at The Cambridge Group, a part of Nielsen. “A global sentiment moves to one of cautious stability. As recovery continues, signs of optimism are increasing.”


The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among more than 30,000 respondents with Internet access, in 60 countries.


In the latest round of the survey, conducted Feb. 17 – March 7, 2014, consumer confidence increased in 60 percent of markets measured by Nielsen-up from 43 percent the previous quarter (Q4 2013). Indonesia (124) reported the highest consumer confidence index score for the fifth consecutive quarter, which was flat compared to fourth-quarter 2013. Croatia and Italy each reported the lowest consumer confidence scores (45), an increase of one point each compared to the previous quarter. Egypt (87) and Switzerland (104) reported the largest quarter-on-quarter increases of 11 and 10 points, respectively. Ukraine (56) reported the biggest quarterly decline of seven points.


Text of the report is based largely on the Nielsen Global Consumer Confidence report  that MxMIndia sourced from Nielsen India


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