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Asia Pacific Consumers Look to Cut Back on Discretionary Spending: MasterCard Survey

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Consumer confidence across the Asia Pacific region has fallen seven points from six months ago as a result of the current economic volatility and the concerns over a global economic recession, according to the latest MasterCard Worldwide Index of Consumer Confidence.

Consumers are also tightening their belts, with 70% of the regions consumers looking to cut back on their discretionary spend for the next 12 months. These were some of the findings from the inaugural MasterCard Worldwide Index of Consumer Purchasing Priorities and the latest MasterCard Worldwide Index of Consumer Confidence which were released today.

Consumers across the region are bracing themselves for tougher times ahead in 2009. In most markets across Asia, more than half of the respondents surveyed are looking at cutting back on discretionary spend. Australia and New Zealand stand out as the only two markets where less than half of the consumers surveyed indicated a reduction in discretionary spend over the next 12 months. While many are looking towards China to help maintain economic growth momentum in the region, the fact is the Asias economic powerhouse itself is slowing down fast, with 60% of Chinese consumers indicating a reduction in discretionary spend, said Dr. Yuwa Hedrick-Wong, economic advisor, Asia Pacific, MasterCard Worldwide.

The MasterCard Worldwide Index of Consumer Confidence is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. Five economic factors are measured: Employment, the Economy, Regular Income, Stock Market and Quality of Life.

Key highlights include:

Only four - Vietnam (88.1), China (76.6), India (63.9) and Singapore (62.3) - out of the 14 markets surveyed are optimistic about the first half of 2009, although all but Vietnams score had declined from six months ago. Australia was neutral (49). Hong Kong, having dropped from 83.1 six months ago to 41.8 currently, and Taiwan (from 71.3 to 32.1 currently) experienced the greatest decline in consumer confidence.

The latest region wide consumer confidence score of 47.4 is below the score six months ago (55) and a year ago (67.3), but above the average of 32.3 during the 1997-98 Asian economic.

Overall consumer outlook across the region fell for all five indicators measured from six months ago - Employment (from 54.2 to 41.2), Economy (from 51.8 to 42.1), Quality of Life (from 48.2 to 44) and the Stock Market (from 53.4 to 45.5). The outlook for Regular Income (from 72.2 to 64.3) declined but remained optimistic.

MasterCard Worldwide Index of Consumer Purchasing Priorities

Consumers across the region currently spend an average of between 10 20% of their personal annual income on discretionary items. Some 30% of consumers spend 21% - 50% of their personal annual income on discretionary items, and 5% of respondents said they usually spend more than 50% of their personal annual income on discretionary items.

Seventy percent of the regions consumers, however are looking to cut back on discretionary spend over the next 12 months. Markets with the highest number of consumers looking to reduce expenditure are Taiwan (90.8%), the Philippines (90.5%) and Korea (85.5%). New Zealand (44%), Australia (46.5%) and China (60.1%) have the least number of respondents looking to reduce their discretionary expenditure over the next 12 months.

Over the 12 months ahead, male counterparts (69%) are less likely to cut back on their discretionary spending as compared to female consumers (71%).

Younger consumers are less likely to cut back on spend as compared to their older counterparts. 68.1% of consumers aged 30 years and below would cut back on spend, as compared to 71.9% of consumers aged 56 years and above.

Across the region, Dining and Entertainment is the top discretionary spend priority (59%) for the next 12 months, followed by Fashion and Accessories (46%), Childrens Education2

One in three consumers is looking to save more than 20% of their income over the next 12 months. Saving is important to consumers in all markets, especially to the Filipinos (97%), Indonesians (96%), Malaysians (93%), Indians (92%) and Thais (90%). Even China, which was at the lowest end of the list, had 78% of consumers stating that saving was important. (44%) and Personal Travel (42%). Dining and Entertainment is the top purchasing priority in 11 out of the 14 markets surveyed, with the exception of India, Korea and the Philippines where Childrens Education ranked top.

The MasterCard Worldwide Index of Consumer Confidence and MasterCard Worldwide Index of Consumer Purchasing Priorities are based on consumer surveys conducted by MasterCard across the region. A total of 6,019 consumers were surveyed in 14 markets (Australia, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam) between 1 to 29 September 2008. Data collection was via personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.

The new MasterCard Worldwide Index of Consumer Purchasing Priorities, which will be released annually, provides valuable insights into consumers savings and expenditure behavior and their discretionary spending priorities for the 12 months ahead. The long running MasterCard Worldwide Index of Consumer Confidence provides information on consumer sentiment across the region.

See also: Market Highlights from Travel Industry Survey and other recent news regarding: Airlines, Aviation, Flights, HotelsPromotions, New Hotels, MasterCard, MasterIndex, Spending

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