Consumers' hopes for an end to the Global Economic Crisis have been bolstered in the 2nd Quarter 2009, according to a Nielsen Global Consumer Confidence Survey released recently. The Nielsen Global Consumer Confidence Index, conducted in 28 markets in June 2009, rose to 82—an increase of 5 points (from 77) from March 2009—spurred by renewed consumer optimism and stock market gains in BRIC markets (Brazil, Russia, India, China) and key Asian countries. [See full graphic full graphic for complete details]
"In the previous Nielsen Global Consumer Confidence survey conducted in March, we were seeing the first signs that as far as the world's consumers were concerned, the recession had bottomed out. Three months later, they're starting to embrace the idea of recovery—which is a major turning point," said Jonathan Banks, Business Insights Director, The Nielsen Company.
In Nielsen's latest survey, which polled 14,029 online consumers in 28 countries late in June, 71 percent of respondents thought their country was in recession—a positive reduction of six points from a high of 77 percent when the survey ran in March 2009.
"The BRIC and Asian markets have recorded the greatest jumps in Consumer Confidence Indices in the past three months," noted Banks. "Consumer confidence in India jumped 13 Index points, and climbed 9 points in Japan, South Korea, Hong Kong and Indonesia. Consumer confidence rose 8 Index points in Taiwan and Brazil, and 7 points in Singapore, Turkey, Russia, Philippines and the UK. The only exceptions to this upswing were in the USA and New Zealand, which held flat in the second quarter, with Germany the only country to register a decline of one Index point," said Banks.
Even in the market registering a small decline—Germany—there are encouraging signs that a recovery is imminent. According to the Nielsen survey, nearly one in three Germans (29 percent) said the recession would be over in the next 12 months, compared to only 22 percent three months ago. One in three Germans also thought "now is a good time to buy the things they want," indicating a renewed willingness to spend on discretionary items. Thirty-eight percent described their personal finances as "good" for the next year.
"This is one of the strongest indicators of a global consensus among consumers that the worst is over, and that finally, there is light at the end of this long tunnel. And consumers in emerging and Asian markets are clearly of the view that they are driving in the recovery lane now," added Banks.
The latest Nielsen Confidence numbers are a welcome return to positive, confident territory for consumers in the developed Asian markets of South Korea, Taiwan and Japan, who have been battling economic inertia and political instability for several quarters.
"Asian consumer confidence appears to have been boosted through successful government economic stimulus packages that were speedily and effectively implemented at the onset of the global recession," noted Banks. In the world's second largest economy, the Japanese government implemented tax breaks, introduced cash deductions and subsidies on new car purchases, as well as providing cash payment and premium gift coupon schemes to stimulate spending.
"As well as expanding credit terms to small and medium sized businesses, in Japan there are even incentives to purchase eco-friendly household appliances as part of the government's new environmental policy, and national toll prices for motorways have been discounted to encourage domestic tourism," observed Banks.
Stock market gains in the BRIC and Asian markets have also had a major impact on consumer confidence," said Banks. More than any other region, stock markets in Asia have rallied and property prices are starting to regain their pre-recession values. Russia's stock market is up 60 percent from the start of the year and Taiwan is up over 50 percent. Brazil and Singapore's stock markets have gained around 40 percent in the past six months and the South Korea and Hong Kong stock markets are up over 30 percent. With stock market gains so intrinsically linked to consumer confidence in Asian markets, it's no surprise that Asian consumers are most confident about a receding recession, led by Hong Kong (-14 pts), Taiwan (-13 pts), Singapore and Japan (-12 pts), India and China (-10 pts).
"Positive economic news and growing consumer optimism in the past few months have definitely led consumers in these markets to believe that economic recovery will come sooner rather than later," said Banks. According to the Nielsen survey conducted in March this year, 28 percent of Singaporeans said they expected their recession to end within 12 months—last month this number rose to 39 percent. UAE consumers also share this sentiment. In March, 32 percent of UAE consumers thought the recession would be over within a year but in June 43 percent said they expected the recession to be over before the middle of 2010.
Latest Nielsen data also shows that consumer confidence in the UK —a country that has suffered one of the most dramatic downturns in consumer confidence in the last year—is on the rebound, climbing 7 Index points in the second quarter. "UK consumers are getting the hang of consuming less. People with jobs —still the overwhelming majority—now have more disposable income as they reduce spending on big-ticket items like cars and holidays. With mortgage interest rates at their lowest levels, savings rates are increasing quickly and this has increased financial confidence," said Banks.
"Consumers know that recovery won't happen overnight but there has certainly been more good news than bad in the past few months," noted Banks.
The decline in constant bad economic news in the media has directly impacted on the topics consumers are talking and blogging about. According to Nielsen Buzzmetrics, Nielsen's service for measuring online conversations, the number of online discussions, or "buzz," in the UK mentioning the word "recession" dropped around 60 percent between late March and late June this year. "People's obsession with the recession has switched to how to live and spend more moderately in a new economic era," said Banks.
Italian consumers have also become more optimistic, showing a strong gain of 7 Index points—their highest Nielsen Consumer Confidence Index since the second half of 2007. "Our survey supports recent Italian government figures which indicate that consumer confidence is returning to the Italian economy. In the last three months, Italian consumers' concern for job security and the economy fell by 4 percentage points respectively, while average supermarket prices fell 0.2 percent in June 2009, indicating that consumers are less concerned about rising food bills than they were two years ago," said Banks. The rise in consumer confidence in Italy has also been positively impacted by the government’s stimulus policies and the significant decline of negative economic coverage in the media. Online discussions mentioning the word "recession" have decreased by 35 percent this year according to Nielsen.
Globally, job security and the economy remained consumers' top two concerns in life but even the level of these concerns has abated in the last three months and recorded declines of two and four index points respectively.
--Nielsen Business Media