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Consumer Confidence Declines Across Most Markets in Asia Pacific, Middle East and Africa

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According to the latest MasterCard Worldwide Index of Consumer Confidence, consumers in China and India remain optimistic about the next six months, despite a widespread drop in consumer confidence across 16 markets in the Asia Pacific, Middle East and Africa region.

Other markets which remain optimistic about the next six months include Qatar (71.4), South Africa (67.3), Saudi Arabia (67.1), Lebanon (64.4) and Vietnam (60.9).

India and China registered scores of 68.0 and 60.8 respectively.

India in particular shines as one of the few markets with a lift in its consumer confidence score from six months ago. Its consumer confidence score increased from 63.9 six months ago to 68.0. It is among the four markets which have seen an increase in consumer confidence, with the other markets being Indonesia (49.2 from 38.5), Japan (21.5 from 17.2) and Taiwan (39.4 from 32.1).

 Dr. Yuwa Hedrick-Wong, economic advisor to MasterCard Worldwide in Asia Pacific said, “The impact of the global crisis on Asia has been massive, with exports declining steeply in most Asian markets, in some cases up to 40% between the summer of 2008 and March 2009. Currently market conditions continue to be volatile; and a high level of uncertainty persists as to what the future may hold. In Asia Pacific, there is a sharp divide between markets with consumers sinking into deeper pessimism; and markets where consumer optimism has stood up well in spite of the general deterioration of economic conditions globally and at home.

“India in particular stands out, where consumer confidence actually increased compared to six months ago. Chinese consumers remain confident about their future; although the level of confidence has dropped compared with last year. Consumer outlook in Vietnam also remains optimistic, albeit at a lower level as well. It is also worth pointing out that consumer sentiments in Indonesia have turned from negative to neutral for the first time since 2007. These are outstanding results given the prevailing economic environment.

“In sharp contrast, consumer outlook in other Asian markets continues to be pessimistic. This sharp divide reflects, to a large extent, the difference in consumers’ perception of the strength of their domestic economy, and how well it could weather the global storm. So it is not surprising that economic growth is expected to be positive in real terms in China, India, Vietnam and Indonesia in 2009. Indeed, it is due to these markets that Asia (excluding Japan) is projected to grow by over 5% this year, compared with more than a 3% contraction in OECD countries. Asia thus leads all other regions in the world in growth this year. Similarly, the Middle East is expected to have positive economic growth this year, although at a level below that of Asia. Hence, consumer confidence remains positive in the key markets in the Middle East, with the exceptions of Egypt and UAE.”

Asia Pacific

The average consumer confidence score of markets in Asia Pacific (38.7) has dipped from six months ago (47.4) and a year ago (56.0), though it is higher than the 1997-98 Asian economic crisis average of 32.3.

 Overall consumer outlook has fallen across the five indicators that make up the Index compared to six months ago: Employment (30.3 vs. 41.2 six months ago), Economy (38.7 vs. 42.1 six months ago), Quality of Life (39.2 vs. 44.0 six months ago), the Stock Market (41.1 vs. 45.5 six months ago) and Regular Income (44.2 vs. 64.3 six months ago).

Only three out of the 14 Asia Pacific markets surveyed – China, India and Vietnam – are optimistic about the second half of 2009. India (68.0) has the highest score among the Asia Pacific markets, with Indian consumers optimistic about Regular Income (70.0) and Quality of Life (74.5).

 While China (60.8) and Vietnam (60.9) remain optimistic about the second half of 2009, they are less optimistic than they were six months ago (China at 76.6; Vietnam at 88.1).

Ten Asia Pacific markets are pessimistic about the second half of 2009, with Singapore (31.2 vs. 62.3 six months ago), Vietnam (60.9 vs. 88.1 six months ago), Australia (24.1 vs. 49.0 six months ago) and Hong Kong (24.7 vs. 41.8 six months ago) recording the biggest decline in confidence scores. Indonesian consumers have turned from pessimism to being neutral in their outlook (49.2 vs. 38.5 six months ago).

Middle East and Africa

The average consumer confidence score of markets in the Middle East and Africa (53.9) has dipped from six months ago (74.0) and a year ago (68.2). This is also lower than its historical average of 75.3.

 Overall consumer outlook has fallen across the five indicators that make up the Index compared to six months ago: Employment (54.7 vs. 73.2 six months ago), Economy (53.1 vs. 74.4 six months ago), Quality of Life (54.4 vs. 75.0 six months ago), the Stock Market (40.0 vs. 60.8 six months ago) and Regular Income (67.4 vs. 86.9 six months ago).

Four out of the seven markets surveyed – Lebanon, Qatar, Saudi Arabia and South Africa – are optimistic about the second half of 2009. Qatar tops the Index with a score of 71.4. Although still optimistic, consumer confidence levels in all four markets have dropped from six months ago: Lebanon (64.4 vs. 69.1 six months ago), Qatar (71.4 vs. 76.2) Saudi Arabia (67.1 vs. 72.4) and South Africa (67.3 vs. 78.7).

The most pessimistic markets in the Middle East and Africa are Egypt (32.3 vs. 55.6 six months ago) and United Arab Emirates (29.6 vs. 75.4 six months ago). Overall consumer outlook for both Egypt and U.A.E. has fallen across all five indicators that make up the Index compared to six months ago.

Now in its 17th year, the MasterCard Worldwide Index of Consumer Confidence is one of the region’s most comprehensive and longest running consumer confidence surveys. Released twice a year, the Index is based on a survey which measures consumer confidence on prevailing expectations in the market for the next six months. It is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.

The latest survey was conducted from 23 March to 18 April 2009 and involved 9,211 consumers from the following 21 markets: Australia, China, Egypt, Hong Kong, India, Indonesia, Japan, Kuwait, Lebanon, Malaysia, New Zealand, Philippines, Qatar, Saudi Arabia, South Korea, South Africa, Singapore, Taiwan, Thailand, United Arab Emirates and Vietnam.

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