MasterIndex of Retail Forecasts Strong Retail Sales Growth Across Asia/Pacific

Growth in retail sales across Asia/Pacific is expected to be robust in the first half of 2004, according to the latest MasterIndex™ of Retail forecast released by MasterCard International.

All 12 Asia/Pacific markets included in the forecast are predicted to see positive expansion, with China maintaining its lead with an anticipated 14.0% year-on-year growth.

Conducted twice a year in June and December, the MasterIndex of Retail was launched in June 2003 by MasterCard as part of its knowledge leadership in Asia/Pacific. It is among MasterCard's MasterIndex suite of research products, providing six-month forecasts of retail sales growth in 12 markets: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand.

Other key MasterIndex research products include the flagship MasterIndex™ of Consumer Confidence - one of the region's most comprehensive and longest running consumer sentiment surveys, and the MasterIndex™ of Travel, which provides six-month outbound travel forecasts that are highly relevant to the travel/tourism and related sectors.

In addition to the forecast of China's stellar performance, other highlights of the MasterIndex of Retail for the first half of 2004 are as follows:

· Thailand takes the number two spot in the retail sales growth predictions with 10.8% year-on-year growth, followed closely by two other South East Asian markets which also show impressive growth prospects: Malaysia (9.2%), Indonesia (8.0%). While not as bullish, the Philippines (5.6%) and Singapore (3.9%) are also indicating positive year-on-year growth prospects.

· Korea shows strong recovery, driven by particularly rapid expansion in exports. With domestic consumption starting to recover going into 2004, retail sales growth is predicted to hit 8.2% year-on-year, up from its 2003 year-on-year contraction of 0.7%.

· Hong Kong and Taiwan show post-SARS retail recovery forecasts at a healthy year-on-year growth of 6.8% and 5.5% respectively.

· Japanese consumers are also reasonably positive; retail sales are anticipated to grow by 4.5% over the previous year.

· The Australian and New Zealand retail sectors are both optimistic with anticipated 4.5% and 5.0% year-on-year growth respectively.

"The positive retail sales outlook across Asia/Pacific is very encouraging particularly after the devastating effects of SARS on key markets last year." said Stuart McDonald, senior vice president, Regional Business Development, Asia/Pacific, MasterCard International. "Moving into 2004, industries such as wholesale and retail, entertainment, food and beverage, hospitality, leisure and consumer goods manufacturing should start to gear up for an improved business environment. As a powerful predictive market intelligence tool, the MasterIndex of Retail can help businesses anticipate and prepare for this."

Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard International, commented, "The MasterIndex of Retail forecast for the first half of 2004 point to accelerating household spending, supported by stronger employment growth, rising exports, and accommodating interest rates. This is a continuation of the post-SARS recovery, and should gain momentum as the new year unfolds."

Combining 10 years of retail sales data , factoring in the secular trend of growth of the retail industry, and using the MasterIndex of Consumer Confidence as an independent variable , an estimate of retail sales value is obtained for the same six-month horizon covered by the MasterIndex of Consumer Confidence.

INDIVIDUAL MARKET FORECASTS FOR FIRST HALF 2004

· Retail sales in Australia are expected to grow by 4.5% on the previous year, reaching A$77.0 billion in value in the first six months. Australian consumer confidence saw a significant improvement in the latest MasterIndex of Consumer Confidence survey. The outlook for the first half of 2004 increased from the previous score of 45.3 to 80.9.

· Retail sales in China for the first half of 2004 are forecasted to grow by 14.0% year-on-year, valued at 2.45 trillion Yuan. Consumer confidence in China has rebounded (83.7) having fallen off sharply from its previous MasterIndex score of 68.0. Chinese consumers' expectations are highly positive, particularly with regard to the economy, quality of life and regular income.

· Hong Kong's retail sales for the first half of 2004 are expected to increase by 6.8% year-on-year to reach HK$86.2 billion in value in the first six months. Hong Kong's MasterIndex of Consumer Confidence score of 81.1 is its second highest on record. Consumer outlook on employment, the economy, and the stock market are particularly optimistic.

· Retail sales in Indonesia for the first half of 2004 are expected to manifest year-on-year growth of 8.0% to reach 120.1 trillion Rupiah in the first six months. Consumer confidence in Indonesia has declined from previous optimistic level of 57.5 to the current 49.0. This could possibly be attributed to the rising uncertainty leading up to the presidential election.

· The forecasted growth in retail sales for Japan is 4.5% on the previous year, valued at ¥57.1 trillion for the first six months. Japan's MasterIndex of Consumer Confidence currently stands at 31.8, showing a marked improvement in consumer confidence from June last year (17.4).

· Korea's retail sales are expected to expand by 8.2% with a total value of $66.6 trillion won in the first half of the year. Korean consumer confidence, while still somewhat pessimistic at 43.6, shows a marked improvement from six months ago (31.0) and year ago (39.2).

· Malaysia's retail sales are expected to increase year-on-year by 9.2%, to reach an estimated RM27.4 billion in the first six months. Malaysia's consumer confidence score of 93.5 makes it the second most optimistic country after Thailand for the first half of 2004.

· For the first half of 2004, retail sales for New Zealand are forecasted to grow by 5.0% year-on-year, reaching NZ$15.2 billion in total sales value. The latest MasterIndex of Consumer Confidence for New Zealand indicates a strong increase in optimism from the previous score of 56.6 to 73.7.

· The Philippines' retail sales are estimated to grow by a healthy 5.6% in the first half of 2004. Total sales value is expected to reach 290.2 billion Pesos. However, the Philippines' consumer confidence score of 34.3 is among its lowest recorded.

· The forecasted retail sales for Singapore are expected to be at 3.9% year-on-year, with total sales valued at an estimated S$12 billion for the first six months. Consumer confidence in the island recovered to an optimistic 65.3 from the deeply pessimistic score of 23.9 for the last half of 2003.

· Taiwan's retail sales are forecasted to grow by 5.5% year-on-year. Total sales value over the first half of the year is estimated to reach NT$1,376 billion. Taiwan's latest consumer confidence score of 65.7 represents a strong rebound from the deep pessimism during the second half of 2003 when it registered a score of 26.5.

· Retail sales in Thailand are poised to expand by 10.8% year-on-year, with sales value reaching an estimated $856 billion Baht over the next six months. Thailand continues to lead with the highest consumer confidence score of 95.1 in Asia/Pacific.

    * Excludes hospitality, catering and auto sales