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."

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. >>MORE