MasterIndex Reveals Consumer Confidence in Asia Pacific Resilient in Withstanding Shocks

Travel News Asia 6 January 2005

MasterCard today announced the results of the latest MasterIndex of Consumer Confidence. MasterCard also released its analysis of how consumer confidence in Asia/Pacific has fared over the 20032004 period when a series of global and regional shocks took place. The bi-yearly survey reveals that, overall, consumer confidence in Asia/Pacific withstood the tumultuous 20032004 period despite the series of external shocks of SARS, Iraq War, avian flu, and the spiking of the world price of oil. This latest release of MasterCards analysis of consumer confidence is especially timely in light of the tsunami disaster that has affected many countries and taken many lives in the region.

The impact of the shock of SARS, coupled with the Iraq War, was very severe across most of Asia/Pacific, which brought the regions confidence score down to a slightly pessimistic level of 46.8 in the second half of 2003. The region, however, rebounded strongly by the end of 2003, returning to optimism with a score of 66.5 for the outlook of the first half of 2004.

The avian flu in early 2004 barely affected consumer confidence and by mid-year the outlook for second half of 2004 was only marginally lower (63.7). Despite the sharp spiking of the world price of oil in the third quarter of 2004, which set new records, Asia/Pacifics consumers took it in stride and remained optimistic in their outlook for the first half of 2005 with a score of 63.2.

In its thirteenth year, the bi-yearly survey, which is one of the regions most comprehensive consumer sentiment surveys, analyzes prevailing consumer perceptions of economic conditions across 13 markets for the six-month period ahead. The scores ranging between 0 and 100 are based on responses to questions on five variables; employment, economy, regular income, stock market and quality of life.

Dr. Yuwa Hedrick-Wong, MasterCards economic advisor in Asia/Pacific, observed that the 20032004 period was probably the most turbulent since the 1997 financial crisis in Asia/Pacific. Consumer confidence in the region has shown great resilience in coping with the series of external shocks that buffeted both the global economy and Asia/Pacific during that time. At one end of the spectrum is China, where robust growth and rapid developments provided a strong foundation for Chinese consumers to shrug off the severe impact of SARS, which barely dented their optimism. Throughout the 20032004 period, Chinese consumers never lost their optimism. At the other end of the spectrum is Indonesia, still struggling with massive economic problems as well as having suffered direct terrorist attacks, where there is today an impressive surge of optimism after a peaceful election with a strong and popular government installed.

According to Dr. Hedrick-Wong, The experiences of the 20032004 period, as documented by the MasterIndex of Consumer Confidence, provides suggestive evidence that consumers in Asia/Pacific have become more resilient in coping with external shocks, which bodes well for the future as there is bound to be more shocks and volatility in store for the global economy and Asia/Pacific in the coming years.

The recent tsunami tragedy has created yet more trial and tribulation across the region, but at the same time, it continues to showcase the regions resilience. As devastating as the tsunami was, there are already signs that resilience is once again at work in Asia/Pacific in rebuilding lives and businesses, commented Dr. Hedrick-Wong.

The people of Phuket, Thailand, for example, have already started to clean up and are keeping their businesses running. The Thai peoples generosity, the rapid deployment of facilities and resources in helping victims, and the outpouring of contributions have made powerful impressions upon foreign visitors. The regions governments and private sectors, working with multilateral institutions, have come together to assist those affected in unprecedented fashion. The tsunami was a tragic disaster of massive proportion in the region, but consumer confidence in Asia/Pacific is unlikely to be affected by it over the longer term, added Dr. Hedrick-Wong.

The latest MasterIndex survey was conducted from 20 October to 5 November 2004 and involved 5,517 consumers across 13 Asia/Pacific markets. Of the markets surveyed, nine had an optimistic MasterIndex score, compared to 11 in the preceding survey conducted in the first half of 2004. Indonesia, Vietnam and China topped the list of markets with a highly positive outlook; other optimistic markets included Hong Kong, Malaysia, New Zealand, Australia, Thailand and Singapore.

Markets with a pessimistic outlook over the next six months are Korea, the Philippines and Japan. Consumer confidence in the Philippines has fallen back from a slightly optimistic level to a rather pessimistic position as compared to six months ago. Taiwan with its current MasterIndex of 48.2 is mildly pessimistic.

Highlights of the latest MasterIndex survey include:

Indonesia takes the lead from Vietnam and tops the region with a near record high consumer confidence of 94.7. This is just marginally lower than its 2Q 1997 record high of 95.9, and greatly exceeds that of six months ago (67.3) and a year ago (49.0).

Consumer optimism in Vietnam looks set to prevail, with a MasterIndex score of 90.8 remaining relatively unchanged from six months ago (91.6) and a year ago (91.0). It would appear that unless something drastic and significant takes place, this very high consumer optimism is likely continue.

China (81.3) remains highly optimistic for the next six months, with the latest MasterIndex improving from six months ago (78.9). This increased optimism comes from an increasing positive outlook towards regular income (91.9) and the stock market (62.6).



The Iraq War and SARS clearly had an impact on Australias consumer confidence. The rebound by the end of 2003, which is reflected in the very strong outlook for the first half of 2004 is however impressive.

Australias current MasterIndex of 61.5 is slightly lower when compared to a period ago (63.4) and is very much lower than a year ago (80.9). Despite being slightly less optimistic than a period ago, Australian consumers are currently still fairly optimistic about employment (61.4 vs. 61.1 a period ago), Economy (62.0 vs. 62.9 a period ago), Regular Income (66.8 vs. 81.3 a period ago) and Quality of Life (57.5 vs. 65.9 a period ago). Stock Market sentiment (59.9) has turned fairly optimistic from the slightly pessimistic outlook (46.0) period ago.

The record high world price of oil may have some marginal impact, but outlook for the first half of 2005 remains optimistic, with the current MasterIndex of 61.5 being higher than sixteen of the twenty-four measurements and is above the market historical average of 57.0.


Consumer confidence in China has held up extremely well despite the serious impact of SARS in early 2003 and the Iraq War. There was a strong rebound by the end of 2003 and outlook for first half 2004 recovered quickly. The slight drop in the confidence level for the second half of 2004 may have more to do with the governments attempts to cool down economic growth. 

China consumers continue to be highly optimistic, with a MasterIndex score of 81.3, it is much higher than the historical average of 72.3.

Consumers remain more optimistic about Regular Income than a period ago (91.9 vs. 86.5) and are still optimistic about the Employment (68.9 vs. 74.1), Economy (88.8 vs. 93.7), and Quality of Life (94.2 vs. 94.4), though less so than a period ago. Outlook for the Stock Market has also greatly improved (62.6 vs. 45.9 a period ago).


The impacts of SARS and the Iraq War were clearly very severe, with consumer confidence in Hong Kong being extremely pessimistic during 2003. The shocks hit at a time when Hong Kong was experiencing deflation and high unemployment. Rebound has however been impressive and the slight drop in outlook for the second half of 2004 had more to do with Chinas attempt to slow economic growth.

Consumer confidence in this market is currently higher than a period ago (71.2) and has virtually reclaimed its near record high of year ago (81.1) despite a record high world price of oil.

Consumers optimism on all five MasterIndex factors, Employment (89.9 vs. 80.9), Economy (89.4 vs. 77.4), Regular Income (66.4 vs. 57.1), Stock Market (71.7 vs.68.5) and Quality of Life (78.7 vs. 72.2), has improved over a period ago to levels comparable to it a year ago near record high.

Hong Kongs current MasterIndex of 79.2 is the second highest out of the twenty-four readings.


Indonesian consumers have been optimistic over 2003 and 2004, with the exception of the outlook for the first half of 2004, when it was impacted by uncertainty over the upcoming presidential election. Optimism has gone from strength to strength since the election in spite of the external and internal shocks.

Indonesian consumers are clearly expecting their situation to continue to improve in the coming months. Consumer confidence in Indonesia is at or near record high. Its MasterIndex of 94.7 is just marginally lower than its 2Q 1997 record high of 95.9. The current MasterIndex greatly exceeds that of both a period ago (67.3) and a year ago (49.0).

It is supported by very highly optimistic sentiment on all five MasterIndex economic factors compared to a period ago, with Employment (91.5 vs. 57.5), Economy (96.1 vs. 69.9), Regular Income (97.4 vs. 87.4), Stock Market (92.8 vs. 53.0) and Quality of Life (95.7 vs. 68.5) seeing a rebound in confidence. Likewise, the current MasterIndex greatly surpasses the markets historical average (67.5).


In spite of the external shocks, Japans consumer confidence continued to improve during the 2003 and 2004 period. It is clear that consumer confidence in Japan is very much driven by domestic concerns. 

Japans current MasterIndex of 37.7 though relatively high for the market, seems to reflect a petering out in the recent growth of consumer confidence that began a year ago (31.8) culminating to a record high period ago MasterIndex of 47.6.

The loss of consumer confidence compared to a period ago is reflected in sentiment on the Economy (36.9 vs. 51.6), the Stock Market (53.5 vs. 68.8) and Quality of Life (21.8 vs. 34.9). There is also some loss of Regular Income sentiment (30.7 vs. 38.7).

The only factor where Japaneses optimism remains unchanged from its period ago is Employment (45.4 vs. 43.9).

By definition, a MasterIndex of 37.7 maybe regarded as negative and even depressed. But those who are familiar with the MasterIndex in Japan, this is relatively good as it represents the second highest MasterIndex ever recorded. The markets record high MasterIndex is only 47.6 while the historical average is 23.8.


Korean consumers confidence has been weak over the entire 2003 and 2004 period. Domestic concerns relating to the consumer debt situation clearly have been the most important cause of pessimism. The impact of SARS and the Iraq War appear to be minimal.

As the economy has been supported solely by its exports, the impact of record high world price of oil has further dampened confidence, with outlook dipping lower. The very depressed outlook on Employment (21.8 vs. 36.6 a period ago), Economy (20.9 vs. 39.5 a period ago), Stock Market (26.5 vs. 41.3 a period ago) and Quality of Life (23.6 vs. 34.8 a period ago) with the exception of Regular Income (55.1 vs. 51.5 a period ago) contributes to a pessimistic MasterIndex of 29.6 - the fourth lowest of the markets twenty-four readings.


SARS and Iraq War had exerted some downward pressure on Malaysian consumer confidence level. Malaysia had however recovered strongly by the end of 2003 and the surge of optimism in the outlook for the first half of 2004 in spite of the threat of avian flu is clearly correlated with Prime Minister Badawis landslide election victory.

Consumer confidence in Malaysia has fallen from 84.0 period ago to its present 78.0 and is currently below its year ago record high of 93.5. The high world price of oil seems to be of continued concern to Malaysian consumers.

With its current MasterIndex at 78.0, consumers are still optimistic about the next six months. They are optimistic about Regular Income (78.4 vs. 84.9), the Economy (78.2 vs. 87.5), Employment (74.9 vs. 90.6), the Stock Market (70.8 vs. 70.6), though less so than a period ago, and they continue to have a very high expectation of Quality of Life (87.8 vs. 86.2).

Malaysias current MasterIndex of 78.0 is slightly above its historical average of 75.9 and it ranks 14th out of the twenty-four measurements.


Consumers in New Zealand have stayed optimistic throughout 2003 and 2004 in spite of the external shocks, with domestic issues such as economic growth and interest rates exerting a greater impact on consumer confidence.

The current MasterIndex of 68.6 shows that New Zealand consumers are fairly optimistic about the next six months. They have become more optimistic than they were period ago (56.6). Consumer outlook on all five factors is very positive especially on Regular Income (92.4 vs. 82.5 a period ago) and Employment (77.8 vs. 59.4 a period ago) while that on Quality of Life (62.4 vs. 47.1 a period ago), the Stock Market (57.7 vs. 46.6 a period ago) maybe considered somewhat to fairly optimistic. Sentiment on Economy (52.6 vs. 47.2 a period ago) is moderately positive.

The current MasterIndex of 68.6 is much higher than the market historical average of 60.1.


Consumer confidence has been struggling to rise above pessimism over the 2003 and 2004 period. The peaceful resolution of the presidential election outcome may have contributed to the consumer confidence breaking through to being optimistic in the second half of 2004.

Concerns over the high world price of oil, coupled with concerns over domestic issues have driven consumer confidence back very significantly from a slightly optimistic 54.8 in the last MasterIndex to its current rather pessimistic 33.7. Consumer confidence is now back to the low level of a year ago (34.3).

The Philippines consumers are currently very pessimistic about Employment (23.6 vs. 44.9 a period ago), Quality of Life (25.0 vs. 49.5 a period ago), the Stock Market (30.0 vs. 47.5 a period ago) and the Economy (31.7 vs. 52.7 a period ago). They, however, still remains somewhat optimistic on Regular Income (58.3) but less so than both period ago (79.5).

Consumer confidence (33.7) is currently running even below the level seen during the Asian crisis (47.7).


Like most markets in the region, Singapores consumer confidence recovered by the end of 2003, and by mid 2004 it rose even higher. The impact of the avian flu appears to be marginal.

After a very significant recovery a year ago (65.3) boosted by further improvement in the last MasterIndex (71.9), the recently gained consumer confidence seems to have petered out resulting in current MasterIndex of 58.7. The impact of the record high world price of oil on top of concerns over the strength of the economy in the coming months may have contributed to the decline.

Consumers are still fairly optimistic about the next six months, except for outlook on Quality of Life (47.7 vs. 61.6 a period ago). This is despite weaker period ago consumer sentiment, with optimism about Employment (64.8 vs. 77.5), Economy (67.2 vs. 82.0) and Regular Income (55.4 vs. 80.6) dipping. Compared to the market historical average MasterIndex of 64.5, the current consumer confidence, though fairly optimistic, is lower than the markets historical average.


While consumer confidence dived during 2003 as a direct result of the severe impact of SARS and to a lesser extent the Iraq War, the recovery was swift at the end of the year. Taiwan also experienced a very turbulent presidential election in 2004 and confidence level started to decline after the election, accelerated by the impact of the high world price of oil. The current MasterIndex of 48.2 is well below a period ago (58.6) and a year ago (65.7).

Except for optimistic consumer sentiment on Regular Income (69.1 vs. 70.1 a period ago), outlook on the rest ranges from a depressed view on Quality of Life (35.8 vs. 48.6 a period ago) to a slightly pessimistic expectation on Employment (42.1 vs. 48.7 a period ago), Stock Market (45.1 vs. 60.6 a period ago) and Economy (48.9 vs. 65.1 a period ago).

The Taiwans current MasterIndex of 48.2 is marginally below the markets historical average of 50.7.


Apart from the four regional shocks, Thailand has also suffered from the additional shock of conflict and bombings in the south since mid-2004. The outlook for the first half of 2005 has been affected by both the high world price of oil as well as the conflict in the south, and is only slightly optimistic with a score of 59.4.

This is not only a significant drop from a period ago (69.2) and year ago (95.1) but also from the previous three preceding periods. Likewise, consumer sentiment on the individual factors Employment (52.5 vs. 74.9), Economy (52.6 vs. 70.9), Regular Income (75.4 vs. 79.3), Quality of Life (59.9 vs. 67.4) have declined from a period ago.

However, consumers are not pessimistic; they have just become less optimistic as they had been over the last five surveys. Its current MasterIndex of 59.4 as well as the outlook on all five economic factors would suggest that the Thai consumer is still reasonably optimistic about the next six months.

The current MasterIndex of 59.4, though keeping its head slightly above the markets historical average of 57.7 is about the eighth lowest MasterIndex recorded thus far.


Vietnams MasterIndex of 90.8 remains unchanged from period ago (91.6) and year ago (91.0). Vietnamese consumers are very highly optimistic about the next six months as they were six months ago and six months preceding that.

Outlook on Employment (90.3 vs. 95.0), Economy (92.0 vs. 94.0), Regular Income (95.9 vs. 94.6), Stock Market (78.8 vs. 76.4) and Quality of Life (97.2 vs. 98.1) continue to be optimistic as compared with a period ago. 

Vietnamese consumers appear to be uncertain only with respect to their outlook on the stock market. Their outlooks on the other four dimensions have been steadily and strongly positive.

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