Concerned, but optimistic

EXPERT OPINION

India's two-point dip to 133 in the recent leg of the Nielsen Global Consumer Confidence Index is the third consecutive one since its peak score of 137 in late 2006.

After topping the Index five times in a row, it has now moved to the second spot, behind Norway, in the November 2007 survey conducted by The Nielsen Company.

This is in line with consumer sentiments worldwide. According to the latest Global Consumer Confidence study, more than a quarter of global consumers expect a global recession in 2008, resulting in a dip in confidence in 21 of the 48 markets Nielsen surveyed. Twenty-seven per cent of the Indian respondents, too, fear a global recession in the next 12 months.

In addition to India, Asia Pacific markets including Indonesia, Australia, Hong Kong, Vietnam, New Zealand and Singapore were all among the world's top 10 most optimistic "" with Indonesia, Australia and Singapore, in particular, registering an increase in consumer confidence levels "" making Asia Pacific the most optimistic region worldwide.

Jobs and personal finances
Although consumer confidence in India has dropped slightly, Indians are optimistic about the local job prospects over the next 12 months.

Thirty-eight per cent Indian respondents consider job prospects in the country excellent, and 57 per cent respondents consider the job prospects good. With a figure of 95 per cent, Indians are the second most optimistic as far as the job market in the next 12 months is concerned.

The Indian economy is booming and new avenues are opening up constantly with various multinationals setting shop in the country. Indian companies are entering foreign soil with high profile acquisitions. The whole world is watching India and quite likely that has instilled Indians with the confidence that the job market is good.

The perception of healthy and promising job prospects for Indians over the next 12 months also makes them confident about their personal finances over the same period.

Fourteen per cent of Indian respondents consider their state of personal finances excellent and 74 per cent consider it good in the next 12 months. Indians are the most optimistic people (88 per cent) in the matter of personal finances.

Good job and financial prospects give them the freedom to indulge in spending. Some 60 per cent of them are optimistic that the time is right to buy things that they would want or need.

The multitude of malls and shopping complexes mushrooming all over the place suggests that someone out there is spending a good amount of money on themselves and their family. This is a good opportunity for marketers to cash in on the spending spree.

In fact, these trends are no longer restricted to bigger metros; smaller towns, too, have their share of malls and branded shops. Money is not just in the hands of a few city dwellers but it has reached far and beyond.

Saving for a rainy day is the most preferred option for more than half the respondents (54 per cent) after covering their essential living expenses. Fifty-one per cent of Indians also invest in shares and mutual funds.

The rising Indian stock market index in the past year led to greater investments in stocks and mutual funds by Indians. With the onset of various media "" both print and electronic "" market news now reaches the living rooms of common people and we see everyone, from housewives to students and retired people, taking a fancy to the trading business.

Interestingly, 34 per cent of Indians will spend on new clothes after spending on their essentials. Spending on holidays (33 per cent), home improvements and decor (30 per cent), new technology (29 per cent), out of home entertainment (28 per cent), paying off debts (28 per cent) are some other areas where Indians will spend their spare cash.

Though all over we get a sense of splurging with good disposable cash in the hands of individuals, Indians are also prudent in thinking that to maintain their current lifestyle even when they get old and retire, it is important for them to save from now. Hence 20 per cent of Indians invest in retirement funds, which is sixth highest for a country globally.

Despite the fact that globally people are spending less and 13 per cent of global consumers have no spare cash after meeting their essential living expenses, only 4 per cent of Indians surveyed have no spare cash left with them, a good indicator of the improving financial condition in the country.

What concerns Indians?
Confidence levels have dropped across countries globally and there are some major concerns for consumers over the next six months. For Indians, the economy of the country tops the list of concerns, with 30 per cent votes, which is 16 per cent less than the last leg of the survey, conducted in May 2007.

In the event of a downturn in the local economy, Indians would be most concerned about inflation (52 per cent), unemployment (50 per cent), political stability (37 per cent), rise in interest rates (36 per cent), civil conflicts (14 per cent), and falling property prices (12 per cent).

Eleven per cent of Indians are also concerned about strikes in case of a downturn in the economy, the highest along with the Philippines for any country in Asia Pacific.

With 28 per cent of the people mentioning them, health and political stability are the second major concerns for Indians over the next six months. Terrorism has become a constant concern for Indians.

There is a 9 per cent increase in respondents who think that terrorism is a major concern for India with 25 per cent voting for it "" the second highest percentage for any country globally, with Turkey leading the list with 59 per cent.

Other concerns include job security (23 per cent), global warming (18 per cent), crime (11 per cent), immigration (2 per cent), and war (1 per cent).

Taiwan (74 per cent) tops the world with most people concerned about the state of the economy in the next six months, followed by people in China (71 per cent).

In fact, seven of the top 10 markets most concerned about the economy are from Asia Pacific.

How it was done

The Global Consumer Confidence Index conducted by The Nielsen Company covers Internet users around the world every six months, representing a global online population of 1 billion consumers.

The survey has been gaining traction since it was launched as an Asia Pacific initiative five years ago, before "going global" at the end of 2004. The latest survey, conducted in November 2007, polled over 26,000 Net users in 48 markets.

The survey was conducted online across Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Malaysia, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Russia, Thailand, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Turkey, the UAE, the UK, the US and Vietnam from Europe, Asia Pacific, North America and West Asia.

In the Asia Pacific region, the countries surveyed are: Australia, China, New Zealand, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Singapore, Thailand, Taiwan, Vietnam and the Philippines. About 500 people were interviewed in each country.

Three questions are used to calculate the consumer confidence index. They relate to job prospects in the next 12 months; the state of the respondent's personal finances in the next 12 months; and, based on the cost of things and the respondent's personal finances, whether or not it is a good time to buy things he wants and needs.

The scale of answers to all three questions are: Excellent, Good, Not so good and Bad. To calculate the index, each response was given values: Excellent (200), Good (133.3), Not so good (66.6) and Bad (0). Using these values, the average of the three questions was taken for each respondent.

The index for each country was calculated by taking the index average for each respondent in that country. An index value of 100 corresponds to an average halfway between "Good" and "Not so good".