Editorial: A glass half full

The latest AC Nielsen Global Consumer Confidence survey, of over 28,000 users of the internet in 51 countries, does not throw up any surprises, given the state of the world economy and the short-term outlook. The survey, published in this newspaper's Strategist section yesterday, shows that the US index of consumer confidence fell a dramatic 17 points, while 66 per cent of Americans reported they were more pessimistic about their job prospects over the next year. This is in contrast to the previous Nielsen survey six months ago, when the US was not even in the list of countries pessimistic about the future! The survey shows that the mood in Japan is equally sombre, with 88 per cent of those polled negative about their job prospects, up from 83 per cent the last time round. India fares no better in some respects "" consumer confidence in the country showed one of the sharpest falls of nearly 10 per cent, from 133 points in the second half of 2007 to 122 in the first half of 2008. The survey was done in April, when the macro-economic situation didn't look quite as bad as it does now, for inflation was still relatively modest at 7 per cent or less. Indeed, 42 per cent of Indians said the country was already in a recession! By way of comparison, just 14 per cent of Chinese felt the same way. This sentiment, not surprisingly, was reflected in other areas as well. Over half the Indians surveyed said it was a bad time to buy the things they needed over the next one year.

But while the global economic outlook is cloudy and will have a spillover effect on India, a part of the problem could well be perception management. Compare the responses on whether now is a good time to buy things, with the response to the question on personal finances, and the differences are telling. As against 53 per cent of Indians who felt this was a bad time to buy things required over the next one year, just 18 per cent felt their personal finances would be in either bad shape or in a 'not so good' shape. Indeed, 12 per cent felt they would be 'excellent' and 67 per cent said they would be 'good'. In other words, the fears about rising interest rates causing distress to consumers who have taken on debt may be exaggerated.

In fact, the Indian mood seems to be that things aren't too bad, but they are not as good as before. For instance, 26 per cent of the Indian polled said job prospects were excellent, while a further 60 per cent said they were good "" making India the second most optimistic country (after Norway). However, it is also true that these numbers compare poorly with the last survey, when 45 per cent considered their job prospects excellent, and another 48 per cent said they were good "" making for an astonishing 93 per cent between the two categories. The more relevant though is that even in April, 86 per cent of the respondents thought their job prospects were good or excellent "" which is not in consonance with the perception of a recession having set in. It is a fair bet, though, that the next survey will show a further drop in the mood.