Authors : Georgette Tan
July 29, 2015
While consumers in Asia Pacific remain generally optimistic about the future, the level of optimism is beginning to recede in a number of markets, according to the MasterCard Index™ of Consumer Confidence, released today. The decline comes off the back of a ten year high in optimism levels in the second half of 2014 and reflects an increasingly uncertain economic outlook.
Between May and June 2015, 8,718 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.
- Collectively, Asia Pacific markets remain optimistic – levels of optimism remain stable at 66.1 Index points in H1 2015 compared to 68.3 Index points in H1 2014. This stability reflects the fact that the most pessimistic markets are showing signs of improvement while the most optimistic are showing decreased confidence.
- People in Indonesia, Thailand and Myanmar remain generally optimistic but consumers have shown significant deterioration in their confidence from very high levels 6 months ago.
- While optimism remains high overall, there is still significant variation between markets in the region. Australia is the only pessimistic market at 39.5 Index points, while India, with 93.1 Index points is the only market in Asia Pacific in which consumers are ‘extremely optimistic’ about economic prospects over the next six months.
- Consumer confidence in China and Hong Kong were shown to be stable, remaining optimistic. However, it is very important to note that the survey was conducted between May and June, before the fall in the Chinese stock market. There was no indication that confidence in the stock market would fall, and in the survey, the local stock market component is in optimistic territory at 81.3 Index points for China and 80 Index points for Hong Kong.
- Meanwhile Australia, Taiwan, and Japan showed improvement in consumer confidence. However they started off at either a pessimistic or neutral base.
- Indonesia (64.3) showed the greatest decline in confidence levels of all the markets surveyed with a 25.8 point drop led by large decreases in confidence in the economy (-31.6) and the stock market (-29.7). Bank Indonesia’s own consumer confidence index also shows falling numbers due to shrinking job availability as well as declining income and business activity.
- Consumer Confidence in Thailand (72.8) showed significant deterioration with a 10.9 point decrease. The outlook on the economy (-15.3) and employment (-12.5) contributed most to the drop.
- Myanmar’s (81.6) consumer confidence posted a 15.6 point decrease moving it out of the 94+ (extremely optimistic) territory for the first time since MasterCard started surveying the country in 2013. The decrease was led by declining optimism regarding the local stock market (local property market for Myanmar) at -31.8 points.
- Consumer confidence in Japan showed extreme improvement, increasing by 22.3 points. Solid economic growth in the first quarter and increased tourism spending from overseas is supporting the retail sector. According to MasterCard’s latest Global Destination Cities Index, two of the fastest growing tourist destinations in the world since 2009 are in Japan, Osaka and Tokyo.
- In Southeast Asia, Philippines (81.4), Singapore (65.3) and Vietnam (86.9) remain stable with increases of less than 5 points. Malaysia (44.9) moves further into pessimistic territory with -5 points.
- Australia’s one year slide has abated somewhat in this survey with an increase of 5.4 points, but at 39.5 it still remains below the 50 point neutrality mark. New Zealand remains stable at 57.7 (+1.3).
- India’s consumer confidence remains in extremely optimistic territory (93.1, +1.5). It is the only market among the 17 that is above 90 points. Bangladesh falls 8 points to 75.3, driven downwards by a 21 point decline in confidence in the outlook of the local stock market (46.5). Sri Lanka makes its debut in the Index of Consumer Confidence at 67.5 putting it in optimistic territory.
Matthew Driver, Group Executive, Global Products & Solutions, Asia Pacific, MasterCard, said: “Consumer confidence is a more nuanced story for Asia Pacific in 2015 as economic uncertainty has begun to impact more developing markets. India is now the only market in Asia Pacific in which consumers are extremely optimistic about the future. The energy that Prime Minister Modi has brought to his reform agenda is being well received and having meaningful outcomes. Indeed the IMF is forecasting that India's economy will grow 7.5% this year, outpacing China for the first time since 1999. Chinese consumers also continued to be optimistic and with the survey period ahead of the recent stock market adjustments, were even more confident than in 2014. In comparison there was a significant moderation in consumer sentiment in a number of markets in Southeast Asia as the economic outlook has softened – specifically Indonesia, Myanmar and Thailand, all of whom recorded double digit declines in confidence. There were also further falls in Malaysia.”
|H1 2015 Current Status||Change from last half|
|Asia Pacific||66.1||Optimistic||0.6||Stable +|
|China||85.9||Very Optimistic||0.6||Stable +|
|Hong Kong||61.2||Optimistic||20.3||Extreme Improvement|
|India||93.1||Extremely Optimistic||1.5||Stable +|
|Japan||56.6||Neutral +||22.3||Extreme Improvement|
|Korea||40.0||Neutral -||-3.6||Stable -|
|Malaysia||44.9||Neutral -||-5.0||Stable -|
|New Zealand||57.7||Neutral +||1.3||Stable +|
|Philippines||81.4||Very Optimistic||4.3||Stable +|
|Taiwan||49.6||Neutral -||15.7||Significant Improvement|
|Vietnam||86.9||Very Optimistic||1.7||Stable +|
|Myanmar||81.6||Very Optimistic||-15.6||Significant Deterioration|
|Bangladesh||75.3||Very Optimistic||-8.0||Some Deterioration|
Index Score Current Status Change in Index Points from last half
|Lower Range||Upper Range||Qualitative Statement||Lower Range||Upper Range||Qualitative Statement|
|0||10||Extremely Pessimistic||-100||-20||Extreme Deterioration|
|10||25||Very Pessimistic||-20||-10||Significant Deterioration|
|40||50||Neutral -||-5||0||Stable -|
|50||60||Neutral +||0||5||Stable +|
|75||90||Very Optimistic||10||20||Significant Improvement|
|90||100||Extremely Optimistic||20||100||Extreme Improvement|
Respondents were asked five questions pertaining to their six-month outlook on the economy, their employment prospects, the local stock market, their regular income prospects, and their quality of life. The results of their responses were converted in five component indexes which were subsequently averaged to form the MasterCard Index of Consumer Confidence (MICC) score. The MICC Index score and the 5 component index scores range from 0 – 100 where 0 represents maximum pessimism, 100 represents maximum optimism and 50 represents neutrality.
The MasterCard Index™ of Consumer Confidence survey has a 20-year track record of consumer confidence indices collected from over 200,000 interviews, unequalled both in scope and history across Asia Pacific.
It is the most comprehensive and longest running survey of its kind in the region. In June 1997, the Index revealed a decline in consumer confidence – one month prior to the devaluation of the Thai baht that triggered the regional economic crisis. In June 2003, the Index score for Employment in Hong Kong dropped to a low score of 20.0. This was subsequently reflected in Hong Kong’s unemployment rate, which peaked just before September 2003 at eight percent.
The survey began in the first half of 1993 and has been conducted twice yearly since. Seventeen Asia Pacific markets now participate in the survey: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar, New Zealand, Philippines, South Korea, Singapore, Taiwan, Thailand and Vietnam.
The MasterCard Index suite in Asia Pacific includes the long-running MasterCard Index of Consumer Confidence, as well as the MasterCard Index of Women’s Advancement, MasterCard Index of Financial Literacy, and the MasterCard Index of Global Destination Cities. In addition to the indices, MasterCard’s research properties also include a range of consumer surveys including Online Shopping, Ethical Spending and a series on Consumer Purchasing Priorities (covering Travel, Dining & Entertainment, Education, Money Management, Luxury and General Shopping).
MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardAP and @MasterCardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.