UAE consumers remain upbeat and helped the country retain its spot among the world’s top 10 most confident nations even as overall global consumer confidence slipped in the second quarter of this year, according to consumer confidence findings from Nielsen, a global provider of information and insights into what consumers watch and buy.
“Global consumer confidence declined three index points to 91 in Q2 2012 amid a worsening Euro zone crisis, lacklustre US job growth and China’s downward GDP revision for 2012,” says the latest Nielsen report, titled ‘Consumer Confidence Concerns and Spending Intentions around the World: Q2 2012’.
According to the report, the UAE maintained its No. 6 rank in the second quarter this year with an index reading of 108 points, even as consumers in the country are more optimistic than the first quarter this year, when the UAE registered an index reading of 105, according to Nielsen.
Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.
Indonesia increased its index reading by two points to 120 to top the list of most confident countries in the second quarter, just managing to nudge past India, which lost 4 points from the Q1 survey and is now placed second with 119 points. India had been the world’s most optimistic market for nine consecutive quarters.
Nielsen’s top 10 countries by consumer confidence are: Indonesia (120 points, +2 from Q1), India (119, -4), Philippines (116, -2), Saudi Arabia (115, -4) Malaysia (111, +4), UAE (108, +3) Brazil (106, -4) China (105, -5) Hong Kong/Thailand (104, +1, +3) and Egypt (103, +6).
Despite declining by three index points to 91 in this latest quarter, global consumer confidence is up two index points from the same period the previous year (Q2 2011), according to Nielsen.
In the latest round of the survey, conducted between May 4 and May 21, 2012, overall confidence rose in 41 per cent of global markets measured by Nielsen, compared to a 68 per cent increase in the previous quarter. Q2 2012 confidence declined in 26 of 56 markets, increased in 23 and remained flat in seven, the insights provider said in a media statement.
“Consumers are clearly proceeding with caution in relation to their spending intentions,” said Dr. Venkatesh Bala, chief economist at The Cambridge Group, a part of Nielsen.
“Consumer confidence lost momentum in the second quarter as global events, including a worsening Euro zone crisis coupled with slowing growth rates in China and India, impacted financial markets and consumer sentiment in many parts of the world. As renewed volatility entered global markets, consumers reacted by reining in spending and consumption intentions,” he said.
Perceptions of Job Prospects, Personal Finances Declined
According to Nielsen’s survey, 47 per cent of global respondents indicated their local job prospects were “good” or “excellent”, down one percentage point from the previous quarter and up three percentage points from the previous year.
More than half (53 per cent) of global online consumers considered their personal finances over the next twelve months to be “good” or “excellent”, down two percentage points from Q1 2012 and up four percentage points from Q2 2011 (49 per cent).
Economy, Job Security Remain Global Concerns
Consistent with previous quarters, the economy and job security remain top concerns for global consumers surveyed. Sixteen per cent of respondents indicated their top concern is the economy and 14 per cent said they are concerned about job security. Ten per cent of respondents are concerned about balancing work and life responsibilities.
Discretionary Spending and Saving Down
According to Nielsen’s survey, intended discretionary spending and saving decreased globally in Q2 across all sectors reviewed. Twenty-three per cent of global online consumers surveyed said they would spend spare cash on new technology products, down five points from Q1 (down one point from Q2 2011), and 28 per cent of global respondents indicated they would spend spare cash on out-of-home entertainment, down four points from Q1 (down one point from Q2 2011).
Holidays/vacations declined three points from Q1 to 30 per cent (32 per cent the previous year) and saving intentions decreased from 50 per cent in Q1 to 47 per cent of global respondents (45 per cent in Q2 2011) who said they would put spare cash into savings in Q2.
Global Respondents Changed Spending Habits to Save Money
More than two-thirds (67 per cent) of global respondents indicated that compared to this time last year, they changed their spending habits to save on expenses. Among the top three global responses, fifty-one of consumers surveyed said they spend less on new clothes, 48 per cent cut down on out-of-home entertainment and 47 per cent said they try to save on gas and electricity.
Nielsen’s survey shows that in Asia Pacific, consumer confidence declined three points to 100. Consumer confidence declined four points to 88 in North America and two points to 96 in Latin America. An increase of one point each in Middle East/Africa (98) and Europe (73) was reported.
The biggest quarterly consumer confidence gains in Q2 were reported in France (+11), Belgium (+9), Finland (+7), Switzerland (+7), Austria (+6), Egypt (+6), Greece (+6), Poland (+5), Malaysia (+4) and Sweden (+4).
“While the economic situation in France remains challenging as unemployment rates in April and May were the highest in 10 years, price increases for fast-moving consumer goods is slowing down and sales remain somewhat protected from the crisis,” said Laurent Zeller, managing director, Nielsen France.
“The rise in optimism in the second quarter was also fuelled by a post-election euphoria as new President François Hollande buoyed hope for the future. The current mood was measured prior to the Parliament elections won by the socialist party, but the outlook will likely turn gloomy as the government will soon announce measures, such as higher taxes, to cope with public deficit and debts and to fund some social benefits."
While India had been the world’s most optimistic market for nine consecutive quarters according to Nielsen’s survey, Indonesia reported the highest consumer confidence index in Q2 at 120, topping India’s score of 119.
“While there is no doubt the Indian economy is slowing down a bit and the country is adjusting to that new reality, the nominal GDP growth rates are still the envy of the developing world given the size and scale of the market,” said Piyush Mathur, president, Nielsen India Region.
“India’s consumer confidence remains amongst the highest of the countries tracked in the survey and while Indian consumers are getting more anxious about job prospects, rising inflation and a slowdown in the economy, when we look around the world, they still seem to be among the most optimistic.”
The biggest quarterly consumer confidence declines in Q2 were reported in Taiwan (-12), Argentina (-5), Australia (-5), China (-5), Netherlands (-5), United States (-5), Brazil (-4), India (-4), Italy (-4), Norway (-4), and Saudi Arabia (-4).
“After several consecutive quarters of increases in consumer confidence, it is reasonable to see a slight pullback,” said Yan Xuan, president, Nielsen Greater China.
“In spite of the decline, China’s consumer confidence remains one of the most optimistic relative to their counterparts in other major economies. Confidence cannot increase indefinitely especially in light of the impact of the current global economy and the ongoing European financial crisis on China’s export growth. Over time, the Chinese government’s efforts to transform China into a consumption-led economy will pay off for the country.”
Chris Percy, managing director, Nielsen Pacific, said: “Australian consumer confidence hit its lowest level since the Nielsen Consumer Confidence Index was established in 2005, sinking lower than levels previously recorded at the height of the global financial crisis.
“Continued frustration over interest rates and ever-increasing utility and living expenses are impacting discretionary spending, as consumers opt to keep their wallets firmly in their pockets.”