If your business depends on consumer sentiment – and let's face it, most of them do – you've probably been on quite a ride over the past couple of years. Words as diverse as 'rocketing', 'plunging', 'plummeting' and 'recovering' have all reasonably described markets and sentiment over a very short period of time.

We do not need to document all the economic highs and lows here (we've all lived them) but suffice to say, insight into people's confidence and spending priorities for the coming months helps your business plan and flourish.

Synovate conducts the twice-annual MasterCard Worldwide Index of Consumer Confidence, covering Asia Pacific, the Middle East and Africa. The latest results are from October-November 2009 and ask consumers to look forward six months. This issue of In:fact covers just a few intriguing aspects. You can see the full reports online here: www.masterintelligence.com

Asia Pacific sentiment soars

Back in the first half of 2009, the people of Asia Pacific were holding their collective breath. Confidence was low pretty much across the board and people did not have high hopes for the coming six months. Fast-forward through those six months and it's a different story...

The results from the latest MasterCard Worldwide Index of Consumer Confidence, and its sister study MasterCard Worldwide Survey of Consumer Purchasing Priorities, show that confidence has leapt back to pre-global financial crisis levels, with most nations displaying high levels of optimism. What's more, people are expecting to spend. And spend.

Synovate's CEO for South Asia Tim Balbirnie, says Asian caution was short-lived.

"The financial crisis didn't hit Asia as hard as it did many other places so the pessimism reflected in the previous wave was probably more 'wait-and-see' caution. Now that markets are recovering, it is no surprise to me that people are poised to spend."

Across Asia Pacific, the overall most optimistic nations were Vietnam (with an index score of 90), China (85) and Singapore (79). The Index score is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.

Darryl Andrew, CEO for Synovate in China, comments: "The wider economy in China bounced back very quickly in the second half of 2009, as the Government's big spending stimulus package quickly gained traction. Positive sentiment has also been helped along by the realisation among the wider populace that China has a great influence on, and in, the rest of the world. China's greatly expanded economic clout on the international scene is apparent as news comes through about the overseas acquisition activities of Chinese companies."

Not surprisingly, Japan was the most pessimistic, with an index score of 24, the only one below 50.

Synovate's managing director in Japan, Rika Fujiki, says there are multiple systemic reasons for this view.

"There are many reasons for Japanese pessimism. One major one is that we are the world's fastest aging society and our pension system cannot be maintained. The younger generation's contribution is paid to the older generation. One young person needs to support many aged.

"In addition, Japan narrowly maintained the position of world's second-largest GDP in 2009. But it is clear that China will be number two in 2010. People feel sad about this which leads to a lack of confidence."

Dr. Yuwa Hedrick-Wong, economic advisor, Asia / Pacific, Middle East and Africa, MasterCard Worldwide comments on the overall findings: "The global economy has started to stabilise in the second half of 2009; and conditions have improved especially fast in the Asia / Pacific region. The latest findings of the overall robust rebound in consumer confidence in the region mirrors progress seen in the real economy. In some of the markets where consumer sentiments had fallen precipitously in 2008 and early 2009, their rebound has been equally sharp. While a V-shaped economic recovery remains unlikely, the same cannot be said for consumer confidence, as there does appear to be a V-shaped rebound in confidence.

The survey showed that, for those with an itch in their wallets, the top spending priority for the first half of 2010 across Asia was dining and entertainment, especially evident in Vietnam (90% say they will spend on this), South Korea (75%), Hong Kong (73%) and Singapore (72%).

"Indeed, there is a real 'eat, drink and be merry' attitude... with no fasting in sight," says Balbirnie.

The only Asia Pacific country that did not place dining and entertainment as their number one spending priority was the Philippines. There, people nominated spending on fashion and accessories as their main concern.

Carole Sarthou, Synovate's managing director in the Philippines, puts this down to the fact that Filipinos never actually let up on dining and entertainment.

"Filipinos eat out, go to the malls and more, whether the economy is good or bad. It's a matter of scaling down or splurging, doing it less or more frequently, depending on one's budget. Dining out and entertainment can be an inexpensive and a simple activity; it's simply a given in the urban areas.

"However, when times are tough, Filipinos do refrain from spending on clothes. They never stop desiring them though! And, they tend to keep a mental note of what they would buy if and when they have the capacity to do so. It makes complete sense that people say their first priority will be fashion and accessories."

And when the spending is over, what about giving to others? According to the survey, Filipinos are the most likely to plan for charitable donations (73%, against an Asia Pacific average of 51%).

Sarthou says this has a lot to do with their recent experience with natural calamities and the Filipino mindset.

"We have seen the need to extend assistance to others and, by nature, we like helping people. Filipinos are genuinely concerned with, and for, other people. If there is a way to help we will. And it is better to be the one extending the help. It's a way to share one's blessings."

Middle East confidence recovers

Many economies in the Middle East - particularly Qatar and Saudi Arabia - have not suffered through the global financial crisis. Although Dubai's recent problems have hit the headlines, the other states in the United Arab Emirates (UAE) are holding up well; and the bailout of Dubai by Abu Dhabi has had a positive impact on consumer confidence in the former state. But what did the MasterCard index tell us...?

Indeed, the H2 2009 results of the MasterCard Worldwide Index of Consumer Confidence show that overall Middle East confidence has recovered from H1 2009 levels and is currently on par with H2 2008. It is up from 49.9 in H1 2009 to 74.5 in H2 2009.

Generally, sentiment is stronger in Qatar, Saudi Arabia and UAE, with Lebanon and Egypt yet to recover.

Kurt Thompson, Synovate's CEO of Central and Eastern Europe and the Middle East, says: "It's no surprise that confidence in Egypt is lagging. That country has a greater level of poverty than the other Middle East markets surveyed, and state revenues have suffered through drops in oil prices and in Suez Canal traffic fees.

"However, the findings for both overall consumer confidence and income expectations for Lebanon are a little more surprising. The Lebanese economy has come through the global financial crisis in very good shape, with tourism hitting record levels and property prices booming as political stability improved. However, there has been a return of Lebanese who lost jobs in Dubai and other Gulf countries, and these respondents would naturally have lower expectations for their future income."

Overall, people in the Middle East are most confident of a regular income, although the other aspects of confidence (employment, economy, quality of life and stockmarket) have all dramatically rebounded too. However, in Lebanon, around one in four expect their income to decrease.

The Middle East savings outlook is largely expected to remain the same over the first half of 2010. Exceptions to this can be found in Qatar, where over 50% expect to save more, and conversely in Lebanon, where 41% expect to be saving less.

Thompson says: "The positive outlook for Qatar reflects its buoyant economy, while the gloomier view from Lebanon mirrors the pessimism we see over future income. Another factor in Lebanon is that property prices have shot up in the past year, so respondents in that market are spending more on mortgages or rents."

Like in Asia, dining / entertainment and fashion / accessories dominate purchasing priorities for the first half of 2010; the only exception to this is Qatar where the buying / upgrading of home gets higher priority.

When it comes to discretionary spending, the Middle East is largely expected to remain the same as it was in H2 2009. Both Kuwait and Lebanon show a higher expectation than other markets to increase this spending, while Qatar has a larger proportion of respondents expecting it to decrease.

Thompson says this makes sense. "Even though Qatar was one of the most confident places in the Middle East, there is not necessarily a big need to spend on extras. The Qatar population has benefited from an extended economic boom. Simply put, the average resident in Qatar has probably bought everything he or she could possible desire!"

Africa poised to save and spend

For the first time, the MasterCard Worldwide Index of Consumer Confidence conducted a separate regional report for Africa, covering Morocco, Kenya, Nigeria and South Africa.

CEO for Synovate in Africa, Jon Salters, says: "Obviously these are very diverse nations and there was a huge spread in confidence across the four. However, throughout most of Africa, consumer sentiment was optimistic, with highest levels of optimism in Nigeria and Morocco."

Consumer confidence in Kenya is significantly lower than other African countries, something that Salters attributes to politics.

"Kenya's current coalition arrangement of government appears to be unstable. The current frictions have forced the country into what could be termed a permanent state of 'election politics', even with three years to the next general elections. This has increasingly affected investor confidence on sectors such as tourism - the highest GDP earner - and infrastructure development.

"Kenya also has a large proportion of citizens earning their income from agricultural related industries. The future outlook for the agricultural sector looks gloomy, especially now that the rains appear to have delayed. This will definitely affect business and consumer confidence."

Across the four markets surveyed, half of Africans expect to save more in the first half of 2010 than they did in H2 2009. This was as high as 85% in Nigeria. However, 23% of Africans expect to save less, led by 42% in Kenya.

Of those who expect to save, 71% are doing so for precautionary reasons and the two biggest saving priorities in Africa are investments (55%) and buying / upgrading home (39%).

When it comes to spending, there is more diversity across the African markets than we saw in either Asia Pacific or the Middle East.

The South Africans were most interested in fashion / accessories, Kenyans in tuition, Nigerians in buying / upgrading home, and Moroccans in dining / entertainment.

Most Africans planned to keep their discretionary spending the same as it was in H2 2009, yet Nigerians are significantly more likely to increase their spend and Kenyans to decrease their spend compared to others in the region.

The majority of Africans in all regions said they spend more than 50% of their income to household expenditures.

Forty-two percent of Africans expect to donate to charity in the first half of 2010, topped by 68% in Nigeria and 61% in Kenya. Indeed, 39% of Kenyans (the most pessimistic) expect to donate more than 5% of their next year's annual income to charity.

Nairobi-based Maggie Muringa Ireri, Business Development Director for Synovate across Africa, explains: "Kenyans have big hearts and pull together in tough times. Charity begins at home in Kenya and, because things are not entirely wonderful at the moment, people expect to share some of their income, particularly with close family and other relatives."

About the MasterCard Worldwide Index of Consumer Confidence H2 2009

This issue of In:fact is based on the MasterCard Worldwide Survey of Consumer Purchasing Priorities (MWICPP) for Asia/Pacific, Middle East and Africa, conducted by Synovate.

The MasterCard Worldwide Survey of Consumer Purchasing Priorities is released twice yearly and provides valuable insights into consumers' discretionary spending priorities for the six months ahead. The latest survey was conducted from 1 October to 9 November 2009 and involved 10,623 consumers from across Asia/Pacific, Middle East and Africa. Three new African markets have been added to this survey - Kenya, Morocco and Nigeria - bringing the total number of markets surveyed to 24. Data collection was via online, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.

The survey is designed to gauge the perceptions of people who have the experience and means of engaging in a wide spectrum of economic activities, which dictate the performance of the national economy. Thus, the basic requirement to qualify as a respondent is that he / she owns a bank account and is between 18 to 64 years old.. These requirements provide a feasible mechanism to maximize the inclusion of people who belong to the middle and upper income groups who are most likely to have disposable income in excess of spending on necessities and play a significant role in the performance of the consumer market and the economy.

The distribution of age and sex of the middle and upper income groups in each market is taken into consideration when designing the sampling frame. A standard minimum income is not used to qualify the respondents across all the markets covered in this survey due to difference in purchasing power parity and differing levels of income required to qualify for a credit card. To ensure consistency and comparability with the sample in previous studies, a quota based on sex and age is applied.

Face-to-Face Interviews, Standard Telephone Interviews, and Computer Aided Telephone Interviews (CATI) were used. Online survey was the method used for Hong Kong, South Korea, Japan, Taiwan, Singapore, Australia and New Zealand; CATI was the method of data collection used for Thailand, Malaysia, Philippines, Saudi Arabia, United Arab Emirates and Kenya; Standard Telephone Interviews for South Korea and Thailand and traditional Face-to-Face Personal Interviews was used for the remaining markets.

For each market, the survey has a margin of Sampling Error of plus or minus four percentage points at the 90% Confidence Level except China and India where because of the larger sample size, the margin of sampling error is plus or minus three percentage points. Similarly, because of the significantly much larger sample size for Asia Pacific Middle East and Africa, the sampling error is plus or minus 1.0% or less.

The Index score is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.

For full reports, please go to www.masterintelligence.com.