Published 8 February 2011
The Business Times
By Maarten Kallenberg
They are closely followed by Vietnamese, Malaysians
A DROP in consumer confidence in the fourth quarter of 2010 has not stopped Singaporeans remaining the most optimistic consumers in the region – with Vietnam and Malaysia close behind.
InsightAsia, one of Asia- Pacific’s leading market research groups specialising in quantitative, qualitative research, brand development, business analytics and consultancy – surveys 10,800 people annually across six Asian countries.
Consumer confidence remains strong among Singaporeans, who are very upbeat about the economy and their financial well-being. The Singapore Index soared after the low point of the recession, when consumers were very negative about economic circumstances. As the Singaporean economy recovered during 2009, confidence greatly increased and consumers started looking towards the future with optimism. They maintained that positive outlook on economic circumstances throughout 2010.
Consumers don’t expect unemployment to decrease in 2011 and workers are generally not concerned about losing their jobs.
Singapore recorded 14.7 per cent economic growth in 2010, making it one of the fastest-growing economies in the world.
However, year-on-year growth decelerated towards the end of the year and the forecast for 2011 is a much less buoyant 5 per cent. After a remarkably strong recovery from the recession in 2010 the Singapore economy is expected to achieve stable growth in the coming years.
Other countries in the region also bounced back last year. Though GDP development did not see such a sharp V-curve as in Singapore, growth in China (10 per cent), Thailand (8 per cent), Vietnam (7 per cent), Malaysia (7 per cent) and Indonesia (6 per cent) was strong. The future of the economies of South-east Asia and China looks bright as domestic demand is expected to continue to grow and the regional economies are likely to spur each other on. Growth will settle at a slower pace than in 2010, now that the effects of government stimulus programmes have waned. Analysts see stable regional economic growth at a lower level as a sign of good development. Financial systems are healthy while capital flows and inflation can be managed at the projected growth rates.
The countries in the survey can be divided into two groups. The Consumer Confidence Index of Singapore (128), Vietnam (124), Malaysia (122) and China (113) is significantly above the neutral point. Consumers in these countries are positive about current economic circumstances and confident about the future. GDP growth figures and forecasts support this assured perception.
Consumers in Thailand (91) and Indonesia (97), meanwhile, have a somewhat negative stance towards economic circumstances, despite positive GDP growth in 2010 and an upbeat outlook for 2011. Indonesians and Thais are particularly negative about the current state of the economy and feel it is a very bad time to purchase major household products.
A positive perception of the economy is important for future growth. Recovery from the recession in the US and Europe is fragile and exports to the West are uncertain. Therefore strong regional demand is crucial in sustaining economic growth in South- east Asia and China.
Despite the drop of the Consumer Confidence Index in Q4, consumers in Singapore remain very confident in the economy and their own financial well-being. Throughout 2010 the Consumer Confidence Index of Singapore has been in the 125 to 140 range, far above the neutral point of 100. The positive outlook is a good sign for the development of consumer demand in Singapore in 2011.
The writer is Head of Consumer Confidence Index at InsightAsia Research Group. He can be contacted for more information about the report firstname.lastname@example.org. Free top line reports and more detailed reports can be downloaded at www.insightasia.com.