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“Consumers across Asia Pacific are in a much stronger position to spend more in 2010 compared with last year“ |
Dr Yuwa Hedrick-Wong Economic Advisor, Asia/Pacific MasterCard Worldwide |
ASIA PACIFIC. A new survey from MasterCard forecasts a robust surge in Asia Pacific consumer spending, aided by strong growth in the retail business, in 2010.
The inaugural MasterCard Worldwide Index of Consumer Spending Capability (MWICSC) says that improving economic fundamentals will drive consumer spending, with double-digit rises in retail sales predicted in China, Hong Kong, India, Indonesia, Korea, Malaysia and Singapore.
The new Index has been developed to provide insights into consumer spending in 14 countries over a period of a year. It combines findings from the MasterCard Worldwide Index of Consumer Confidence with six other key factors that affect consumer spend: household income, household indebtedness, interest rates, equity markets, property prices and consumer price inflation. The combination of these factors aims to determine how ‘capable’ households are in a given market to spend in the next 12 months.
Key highlights from the region include:
*A dramatic turnaround in consumer spending capability is expected in Hong Kong (+12.5 points), Korea (+11.9) and Taiwan (+15.5). China’s (+1.9) and Japan’s (+1.2) Index scores have also increased from 2009. The strengthening scores suggest that retail sales will grow in these markets in 2010, and double-digit retail sales growth is expected in China, Hong Kong and Korea.
*India shows a robust increase of 9.9 points in 2010, signalling possible double digit retail sales growth for the year.
*In South-East Asia, the overall picture is also a positive one, with Vietnam having the strongest increase in consumer spending capability (+17.8). This is followed by Singapore (+9.4), Thailand (+7.2), Indonesia (+7.2), Philippines (+6.6) and Malaysia (+5.7). Double digit growth in retail sales is expected in Indonesia, Malaysia and Singapore.
*Australia and New Zealand are also seeing a strengthening of their spending capability scores – an increase of 12.7 points in Australia and 8.1 points in New Zealand.
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Of the consumers surveyed, 65% of them were planning to spend on dining and entertainment in the six months ahead. Fashion and accessories (44%) comes second, followed by consumer electronics (37%), fitness and wellness, and tuition (both at 32%). This mirrors findings from previous surveys.
MasterCard Worldwide Asia Pacific Economic Advisor Dr Yuwa Hedrick-Wong said: “The new MasterCard Index of Consumer Spending Capability shows that consumers across Asia Pacific are in a much stronger position to spend more in 2010 compared with last year, as well as against the benchmark of their levels of spending in the past ten years.
“In markets like Indonesia, Hong Kong, Singapore, India, and Malaysia, the increase in their spending capability this year is expected to be particularly strong. The timing of this rise is especially important as governments everywhere are exiting their aggressive fiscal spending programmes introduced last year. Households are in a position to take up the slack left behind by the withdrawal of government spending to keep domestic demand growing, which will in turn enable the region to better withstand the continued market volatility and uncertainty that is likely to persist through much of this year.”
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A majority (52%) of consumers in the region plan to maintain their discretionary spending at the same level as it was six months ago, while 18% plan to increase it. Compared to the last survey, fewer consumers are planning to decrease their discretionary spending (30% vs. 34% in the last survey).
Consumers in China (26%), India and South Korea (24% each) are the most likely to increase their discretionary spending in the six months ahead, whereas consumers in the Philippines (65%), Indonesia (49%) and Thailand (47%) are prone to reducing their discretionary spending.
Key highlights from the region include:
*Consumers in Thailand (79%), Vietnam (77%), South Korea and New Zealand (73% each) are the keenest to spend on dining and entertainment in the six months ahead.
*Consumers in Vietnam (65%), South Korea (58%) and Japan and New Zealand (50%) plan to spend on fashion and accessories.
*Consumers from Hong Kong (53%), Singapore (52%) and Taiwan (50%) are the most likely to spend on consumer electronics in the next six months.
Note: The markets surveyed include Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, South Korea, Singapore, Taiwan, Thailand, and Vietnam.
