Authors : Desmond Choong
January 01, 2013
(Based on 2013 H1 Survey Findings)
The MasterCard Index of Consumer Confidence is based on a survey conducted between April 2013 and May 2013 on 12,205 respondents aged 18 – 64 in 27 countries. This is the 41st survey of Consumer Confidence conducted since 1993, and covers 3 key regions: Asia/Pacific, Middle East and Africa.
Chart 1a: Summary of Index, Status & Change from Last Half – Asia/Pacific
Chart 1b: ASIA/PACIFIC - Index Scores for 2010 H2 - 2013 H1 & Breakdown by Gender & Age Group
Stable economic growth in Asia/Pacific estimated at 5.75% in the course of 2013 on the back of receding risks emanating from advanced economies, resilient domestic demand, and improved labor markets helped set the stage for improved consumer sentiment across the region. The Index of Consumer Confidence for Asia/Pacific (2013H1) gained 1.2 index points from the last survey (2012 H2) to 63.3 index points, with the indicator of Employment showing the largest increase of 3.2 index points, followed by Stock Market (+2.3 index points), Economy (+1.6 index points), and Regular Income (+0.4 index points). Quality of life was the only indicator that shed 1.5 index points. Comparison across gender and age showed that confidence levels among males and those aged 30 or less were higher at 64.9 index points and 65.3 index points, respectively, compared to females (62.0 index points) and those aged 30 or more (62.4 index points).
Across the region, sentiment among consumers in India, Indonesia, China, the Philippines and Myanmar were very optimistic, while those in Australia, Hong Kong, Korea, New Zealand, Singapore, Taiwan and Vietnam remained neutral. Japan emerged as the star in the survey with the most substantial improvement in sentiment – the overall index surged 37.0 index points from the previous survey to 60.7 index points. Sentiment among Taiwanese and Korean consumers also showed significant improvement, with the index gaining 19.2 index points and 14.8 index points to 52.4 index points and 53.5 index points, respectively. The survey found sentiment among consumers in Bangladesh showing the steepest decline, with the index shedding 39.5 index points to 22.2 index points, underpinned by political uncertainty, a series of strikes, and crisis in the key garment sector.
 “Regional Economic Outlook: Asia and Pacific: Shifting risks, New Foundations for Growth”, International Monetary Fund, April 2013, Online http://www.imf.org/external/pubs/ft/reo/2013/apd/eng/areo0413.htm
 Countries covered in Asia/Pacific include Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, Vietnam, Bangladesh and Myanmar.
Higher-than-expected 1Q 2013 economic growth of 3.5%, a pickup in consumer spending and exports, rising stock prices and anticipation of positive spill-over effects stemming from Prime Minister Shinzo Abe’s “Abenomics” economic strategy have helped spur consumer sentiment levels across Japan.
The overall index advanced 37.0 index points to 60.7 index points, the highest it has been since the 2005 H2 survey when the index reached 63.0 index points – in 2005, the Japanese economy grew by 2.8% on the back of robust consumer spending, increasing capital investment and export growth.
Confidence levels for the economy gained the most (+49.5 index points to 73.1 index points), followed by employment (+46.2 index points to 63.9 index points), and stock market (+41.3 index points to 79.8 index points). The indicators of regular income and quality of life also showed considerable improvements, gaining 23.9 index points and 24.1 index points, respectively, effectively pushing the indicators closer to the neutral point.
It is interesting to note that across all major indicators, males were found to be more optimistic, especially for employment (male: 67.9 index points; female: 60.4 index points); economy (male: 76.2 index points; female: 70.2 index points); and stock market (male: 82.4 index points; female: 76.6 index points). The survey also found consumers aged <30 to be significantly more optimistic towards quality of life (52.4 index points), as compared to those aged 30 and above (34.8 index points).
Chart 2: JAPAN - Index Scores for 2010 H2 - 2013 H1 & Breakdown by Gender & Age
 Prime Minister Abe’s 3-policy pillars include: (i) ramping up government spending, (ii) injecting money into the economy on a massive scale; and (iii) structural reforms as quoted in the article “Japan: Is Abenomics working?”, CNN Money, 15 May 2013, Online http://money.cnn.com/2013/05/15/news/economy/japan-abenomics/index.html
 The index of Consumer Confidence for Japan was on an uptrend from 2004 H2 (37.7 index points) to 2007 H1 (66.8 index points), before it started to tumble in 2007 H2 (48.6 index points) due to the global financial crisis.
Bolstered by a pickup in external demand (especially from China), a stronger tourism sector and private investment growth as well as improved labor market conditions, sentiment among Taiwanese consumers gained substantively. The overall index for Taiwan increased by 19.2 index points to 52.4 index points, more than doubling that seen in 2012 H1 (25.7 index points). This effectively positions sentiment back above the neutral point. The gain in the index was buoyed by significant improvements in sentiment across all major indicators: employment (+27.4 index points to 54.5 index points; more than double), economy (+22.0 index points to 50.9 index points), regular income (+20.0 index points to 60.2 index points), stock market (+14.3 index points to 60.1 index points) and quality of life (+12.7 index points to 36.1 index points).
The survey found sentiment among males to be more upbeat across all indicators, especially on the economy (+16.7 index points) and stock market (+16.4 index points). With the exception of the economy, consumers aged <30 were generally more optimistic than those aged 30 and above, in particular on their regular income.
Chart 3: TAIWAN - Index Scores for 2010 H2 - 2013 H1 & Breakdown by Gender & Age
 The Index of Consumer Confidence for Taiwan was below the neutral point for 3 consecutive cycles previously (2011 H2: 30.1 index points; 2012 H1: 25.7 index points; and 2012 H2: 33.1 index points).
The acceleration of economic growth in Korea to a 2-year high during Q1 2013 (up 0.9% compared to 0.3% in Q4 2012) against a backdrop of lower inflationary pressure and stronger growth in exports, investments and the construction sector helped set the stage for a generally more upbeat sentiment among Korean consumers in the latest survey. The overall index gained 14.8 index points to 53.5 index points, with all 5 major indicators gaining traction, driven primarily by improved sentiment on employment (+18.9 index points), the economy (+16.6 index points) and quality of life (+13.5 index points).
Chart 4: KOREA - Index Scores for 2010 H2 – 2013 H1 & Breakdown by Gender, Age & Major Cities
The overall index of consumer confidence in China shed 4.9 index points from the last survey to 76.9 index points, with the indicator on Quality of Life (74.4 index points) exhibiting significant deterioration of -10.9 index points. However, consumers remained extremely optimistic about their regular income (92.8 index points), and highly positive on their employment and economic prospects (76.5 index points and 82.0 index points, respectively).
Chart 5: CHINA - Index Scores for 2010 H2 – 2013 H1 & Breakdown by Gender, Age & Major Cities
Compared to the last half-yearly survey, the overall index for India shed 3.5 index points to 82.0 index points. Softening inflationary pressure (the wholesale price index dropped to 4.89% YoY in March this year, the lowest since November 2009) amid loose monetary policies geared towards reviving economic growth helped keep the sub-indexes for the major indicators at buoyant levels.
With the exception of stock market and quality of life which shed 11.7 index points and 5.1 index points respectively, all other indicators remained relatively stable. The survey also found the male cohort to be the most optimistic about their regular income (92.6 index points), compared to the other indicators and also their female counterparts (87.2 index points).
Chart 6: INDIA - Index Scores for 2010 H2 – 2013 H1 & Breakdown by Gender, Age & Major Cities
 “Subbarao’s RBI to “Take Note” as inflation eases to 41-month low”, Bloomberg Businessweek, 14 May 2013, Online http://www.businessweek.com/news/2013-05-14/india-inflation-eases-to-41-month-low-adding-to-rate-cut-scope
The interplay of a weaker property market and a credit slump which dampened corporate expansion and consumer spending took a toll on consumer sentiment in Vietnam. The overall index declined by 16.1 index points from the previous survey to 58.4 index points with the sub-indexes for all major indicators taking a hit: stock market and regular income shed the most by 21.5 index points and 20.6 index points, respectively.
Chart 7: VIETNAM - Index Scores for 2010 H2 – 2013 H1 & Breakdown by Gender, Age & Major Cities
Compared to its regional peers, the index for Bangladesh declined the most, down 39.5 index points from the last survey to 22.2 index points, with sentiment on the economy and regular income both shedding 43.4 index points, followed by quality of life (-39.0 index points), employment (-38.7 index points), and stock market (-33.1 index points). The slowdown in economic growth dipped to a 4-year low of 6%, compounded by a series of strikes, the disaster-strewn garment sector and expected sluggish growth in the farming sector which had imparted a major detrimental effect on overall consumer sentiment.
Chart 8: BANGLADESH - Index Scores for 2010 H2 – 2013 H1 & Breakdown by Gender, Age & Major Cities
Desmond Choong is a business and market economist who specializes in providing research and business advisory services to clients in the areas of economic and market modeling with a key focus on Asia/Pacific and the African & Middle East regions. In the past twelve years, he has served as consultant to companies in financial services, manufacturing, logistics, energy, and the tourism industry. As a researcher, Desmond served as Fellow at the American Institute of Economic Research and taught International Trade at Boston University. Desmond holds a B.A. in English/Economics from Boston College and a M.A. in Political Economics from Boston University, MA, USA.
TagsAsia Pacific, regular income, stock market, employment, quality of life, Consumer Confidence, economy
Report on MasterCard Index of Consumer Confidence
Overall sentiment improved slightly; Japanese sentiment surged
JAPAN: Sentiment surged to levels not seen since 2005
TAIWAN: Significant improvement in consumer sentiment
KOREA: Consumers positive about job and economy
CHINA: Overall sentiment retreated against slower economic growth momentum
INDIA: Slight dip in overall sentiment; Lower inflationary pressure lending support
VIETNAM: Economic slowdown a damper on sentiment
BANGLADESH: Sentiment stifled by slowdown in economy & political uncertainty
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