Changing signals

As signs of a slowdown loom large, Indians are no longer the world's most confident consumers. But they are hanging on to their optimism.

It's a bit like the morning after the night before. Through 2005 and 2006, consumers in India and across the world were part of this wild, exuberant celebration. Confidence levels peaked, their willingness to spend and their optimism about job prospects and the state of their wallets were unmatched.

Then, around April 2007, the festivities started winding down. India wasn't willing to call it a day, though, and continued its merrymaking even as other markets began sobering up. But even Indian consumers finally seem to have had enough. This party is so over.

According to the results of the latest round of the ACNielsen Consumer Confidence and Opinions Survey "" made available exclusively to the strategist "" consumer confidence in India is down two points to 133, dislodging it from the top of the 48-nation index.

That's a position India had held through the previous five rounds of the online, bi-annual survey "" the country is still at the head of the 14-nation Asia Pacific regional index, though. Meanwhile, the scores of 21 other countries also dipped, leading the global and Apac indices to shed a couple of points, too. They have settled at 94 and 92, a drop of three and four points, respectively.

Granted, none of this sounds particularly daunting. India's consumer confidence score dropped two points in the April 2007 round as well, so why sound alarm bells now? Perhaps because global events since this current round "" conducted in November 2007 "" haven't been too encouraging.

The subprime crisis in the US, the stockmarkets' bulimic binge-and-purge cycles, Benazir Bhutto's assassination in Pakistan, rising inflation and interest rates... all point to further falls in consumer confidence across the world in coming rounds. Things will get worse before they get better.

So, is there doom and gloom all around? Not really. India may have ceded the most optimistic nation's slot to Norway "" where the index is up two points to 135 "" but that doesn't mean consumers here are ready for sackcloth and ashes.

Over 95 per cent are optimistic about job prospects in the coming year, while 88 per cent are convinced that their wallets will be in good shape over the next 12 months.

As in previous rounds, these are the highest scores for region, and among the top two worldwide "" Norway is ahead by two points in forecasting a bullish job market. There's been a further two percentage point drop in the number of Indians who believe this is a good time to buy things they want or need.

But, at 59 per cent, that score still takes India to the second slot in the Apac rankings, behind Hong Kong for the second time, and to fourth place overall.

Fasting, feasting
The ACNielsen survey is the largest twice-yearly study of its kind. The November round was conducted with over 26,000 respondents from 48 countries; the last round also covered 26,000 people, in 47 nations. Apac's sway over the top of the list continues in the current round "" seven of the most confident countries are from the region.

While India slipped to No. 2 position this time, Denmark has retained its grip on the third most optimistic nation slot "" its score has dropped three points since last time, though, to settle at 124.

Not much has changed at the bottom of the list, too. Six of the least optimistic countries are from Europe; all have scores well below the global average and even lower than the continent's index of 89.

In all, 19 countries had confidence scores that were lower than the global index. And though South Korea's consumer confidence index increased by four percentage points, bringing it to 54, that didn't change its status as the least optimistic nation in the world.

About 88 per cent believe job prospects in the coming year will be between not-so-good and bad, 79 per cent feel the same way about their personal finances, and 86 per cent think this is a bad time to shop.

Those are the worst figures for the region, and among the worst two in the world. Only Portugal is even more down at the mouth about job prospects (92 per cent) and Japan unhappy about personal finances (89 per cent).

How do those not-too-comforting figures compare with the rest of the world? As we pointed out at the start of this article, the mood across the world is sombre, if not downright glum. Not surprisingly then, the numbers reflect that despondency.

Half the world's consumers are pessimistic about the job market, 44 per cent think their wallets will be thinner in a year's time and 64 per cent think this is a bad time to shop.

The signals are more mixed when it comes to the idea of global recession. Three of the top 10 countries agreeing that a recession is imminent in the next 12 months are from Apac. But then, so are three of the top 10 countries pooh-poohing the suggestion.

Equally, the biggest optimist and the biggest pessimist are both from Apac "" 51 per cent of Thai respondents believe a slowdown is a foregone conclusion, while 69 per cent Chinese disagree. Ironically, one of the loudest voices against the idea of a recession is South Korea "" the most pessimistic nation in the survey.

Where does India fit into this equation? About 27 per cent think there will be a recession, while 46 per cent think not. The figures for the region are roughly the same (global: 28 and 40 per cent).

Fear factor
If a recession is a worry for some netizens, others have the usual big three to fret over. The economy, health and job security remain the biggest concerns of consumers across the world.

While close to half (56 per cent in Apac) worry about the economy, health is top of mind for 37 per cent (44 per cent in Apac) and 30 per cent are troubled by job security issues (34 per cent in Apac). Hungary and Turkey have emerged as unlikely worry warts.

While Hungarians' woes are relatively mundane "" health (68 per cent) and job security (60 per cent) "" over a third of the Turkish consumers polled are worried about war, while more than half cite terrorism as a major concern in the coming year.

One in four Dutchmen says he has no worries and Indians are almost as determined to show the world a cheerful face. The country comes in ninth place among nations with no worries at all; its 13 per cent score means India is second among Apac countries that don't have any major concerns.

The economy also ceases to be a cause for concern for many respondents "" with a 16 percentage point drop, India's 30 per cent score is the lowest in the region. Still, some fears do creep through.

Consumers here are among the top five worrying about political stability, global warming and terrorism. Compare that with the last round, when the country didn't figure among the top 10 countries worried about any issue.

Bye bye, buy buy
Perhaps it is a sign of tough times ahead, or perhaps they just like to play it safe. But nobody is really living it up with high spends on clothes, technology, entertainment and holidays.

Instead, about 42 per cent of consumers across the world let their extra money snooze in the savings account, 30 per cent pay off credit card outstandings and other loans, 23 per cent play the market and 11 per cent salt away money in retirement funds.

The numbers for the region aren't significantly different "" nine of the top 10 countries keeping spare cash in the bank are from Apac, while all top 10 investing in the stockmarket are from the region.

In fact, there are more punters in the Apac region than previously "" more than two in five consumers invest in stocks and mutual funds, compared to 39 per cent earlier. That's the only hike in spending, though. There is a drop in spending across all avenues, not just in Apac but across the world.

That's probably because, across the world, there are more people living from paycheque to paycheque "" 13 per cent, one percentage point more than last time. The Portuguese appear to be the worst off "" over one in four says he has no spare cash.

About 7 per cent of consumers in Apac also complain of a lack of spending money, but no country from the region figures in the top 10 for that category. Indians appear to be fairly comfortably off, with just 4 per cent consumers saying they have no spare cash.