Consumer confidence has increased in Southeast Asian countries in the third quarter, while consumers in China curbed some of their previous optimism. The Asian Consumer Confidence Index by InsightAsia reports increases in Indonesia, Singapore, Malaysia and Thailand.
A recent article in The Jakarta Post described how consumer confidence in Indonesia had increased. This article compares the progress of Indonesian consumer confidence to other countries in the region.
InsightAsia, one of Asia Pacific's leading market research groups - specializing in quantitative, qualitative research, brand development, business analytics and consultancy - surveys 9,200 people across five Asian countries on a yearly basis to produce The Asian Consumer Confidence Index.
Asian economies are recovering from the global recession before the developed economies of the US and Europe. For the first time Asia is leading the way out of a global downturn. Until now this recovery has been driven mainly by government support, which will have to be reduced sooner or later.
As exports are still in a slump, Asian economies will depend largely on domestic private consumption for further growth. This makes consumer confidence a key indicator for economic development in Asia.
Confidence in economic conditions increased particularly sharply in Singapore. In the first quarter Singapore had the lowest score of all countries in the survey at 62, far below the neutral point of 100.
At the time, predictions were particularly pessimistic for the city state with an open economy. However continuing signs of recovery have led to strong increases of consumer confidence in the second and third quarter. Singapore boosted its index with 22 points in the third quarter, from 88 to 110.
The strong increase of Singaporean consumer confidence lifts it above Indonesia. Indonesian confidence also rose, but not as strong as in Singapore.
Malaysia and Thailand have a lower consumer confidence index than Indonesia. Both countries are more vulnerable to the global recession because they rely more on exports than Indonesia.
Even though Malaysia and Thailand are expected to resume positive growth at the end of the year or early in 2010, their economies will contract in 2009. The Indonesian economy remained positive throughout the year.
Political instability had given Thailand a disadvantage against the other countries. Even though the consumer confidence index of Thailand is catching up slowly with the other countries in the survey, Thailand still has the lowest index and its political future remains uncertain. New disruptions can have strong repercussions on the economy in Thailand.
China is the only country that registered a decrease, though this does not have to be viewed as a dramatic development.
Following a very strong governmental economic support policy and improved bank loan conditions, Chinese consumers were very optimistic in the second quarter, arguably too optimistic. The high Consumer Confidence Index of 123 in June was corrected to 111 in September.
New official figures have shown very strong growth in October and may very well boost consumer optimism again in the fourth quarter. The Chinese economy is doing very well during the recession, however it should be noted that public spending is the main driver and private demand will have to increase to sustain economic growth in the longer term.
Indonesian consumer confidence is now slightly positive after steady increase in the previous quarters. The economy has been relatively stable during the recession and official forecasts are optimistic.
The index of 105 is below the index of the rebounded economies of China (111) and Singapore (110), and above the still contracting economies of Malaysia (96) and Thailand (88).
The Central Statistics Agency reported on 9 November that the Indonesian economy accelerated in the third quarter, consumer spending being one of the drivers. This positive news could lead to continued growth of consumer confidence towards the end of the year, in turn supporting further GDP growth.
For information about the report, the writer can be contacted at consumerconfidance@insightasia.com. Free top line reports and more detailed reports can be downloaded at www.insightasia.com.
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