Southeast Asian consumer confidence remained strong in Q4 2014, with Indonesia, the Philippines, Thailand and Vietnam ranked in the top 10 most optimistic countries globally, according to the Consumer Confidence Index released today by Nielsen.
However, the economy and job security loomed as top concerns in the region, as consumers showed keen interest in changing spending habits to improve household savings.
Indonesia and the Philippines tie as the second most confident globally, with Thailand coming in fifth. Vietnam and Singapore’s confidence levels also remained relative strong. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism (graph above).
“Consumers in Southeast Asia continued to be among the most confident nation globally. The only exception is Malaysia which recorded the lowest confidence level since Q2 2009, likely due to consumers feeling the pressure of the introduction of GST later this year and uncertainty around any potentially impact on the price of goods and the cost of living,” noted Vishal Bali, Managing Director, Nielsen’s Consumerisation Practice in Southeast Asia, North Asia and Pacific.
The economic climate remained a critical issue for consumers; close to one in five consumers in the region cite it as their biggest concern over the next six months with Thailand and Malaysia leading the way as the most concerned globally. Job security followed as the second biggest issue, with more than 20 per cent of consumers Singapore, Thailand and Vietnam citing it as an area of concern.
SEA consumer spending habits in Q4 2014
About a third of Malaysians, Indonesians and Thais allocated their spare cash for stock/mutual funds, whereas citizens of the Philippines and Singapore were focussed on clearing their debts and loans. Almost one in four Singaporeans and Malaysians channeled their spare funds into their retirement fund – double the global average of 11 per cent.
Sixty nine per cent of Southeast Asian consumers channeled their spare cash into savings, compared to the global average of 48 per cent, with Vietnam ranked as the highest globally, followed by Indonesia in third place.
“With disposable income being more readily available than ever before, consumers across the region have the means to invest their spare cash and strengthen their savings, which is driving greater demand for banking and finance services,” observed Bali.
The report also detailed that four out of six markets — Thailand, Malaysia, Indonesia and Vietnam — are concerned about an incoming economic recession, and that at least eight in 10 consumers in Thailand, Vietnam, Malaysia, Indonesia, and Philippines have adjusted their spending habits over the past 12 months in a bid to curb household spending. Interestingly, while establishing financial security takes top priority in the region, nearly half of Singaporeans and about two in five consumers in Thailand, Indonesia, Vietnam and Malaysia have channeled funds to vacations.
“Consumers are expressing concern around areas such as job security and economic health, and as a result they are cautious with their spending. There is a collective sense of debt-avoidance in the region, and this is resulting in subdued purchasing of big ticket items,” said Bali.
In Malaysia and Philippines, more than six in 10 consumers spent less on new clothing, while 60 per cent of Vietnamese and 56 per cent of Thais and Malaysians cut down on out-of-home entertainment in an effort to reduce household expenses.
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