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24 June 2008
Mumbai, India
Consumer Confidence in India has fallen by 11 points to 122, the lowest level in the last five runs of the survey. According to the Nielsen Global Consumer Confidence Index, which measures consumer confidence, major concerns and spending habits in 51 countries, 42 percent of Indian online consumers who took part in the survey believe that their country is currently in an economic recession.
Globally the latest Nielsen Consumer Confidence Index dropped to 88 – down six points in the last six months – the largest single drop the Index has recorded in the last three years. India dropped from 133 points in the last leg of the survey in November 2007 to 122 points. Across countries, the US suffered the biggest fall in Confidence Index, dropping 17 points.
Overall, Asia Pacific consumers are still amongst the most confident in the world. Five out of the global top 10 countries hail from Asia Pacific and the overall total for the region is one point above the global average. However, for many emerging countries in Asia that have enjoyed the fruits of economic growth and boom in recent years, the last six months have been a stark wake-up call as consumers find themselves struggling with double-digit inflation, rising unemployment rates and stagflation for the first time in a decade.
“The last six months have been a turbulent period for the global economy and this has impacted the growth in the Indian economy as well. The rising crude oil prices, inflation, growing unemployment rates have all diminished the consumer spending powers and have in a way shaken the Indian Consumer Confidence,” said Sarang Panchal, Managing Director - Customized Research, Greater China and Asia Pacific of The Nielsen Company.
Optimistic few
Despite the drop in Consumer Confidence, India ranked second with 122 points, just behind Norway which scored 129 points, on The Nielsen Consumer Confidence Index. Indian consumers continue to be the most confident in the region, despite posting a dramatic 11-point fall. India is one of the few markets that stand to gain from the grim economic outlook – In recent years, India has established itself as a hub for outsourcing technical and support staff; as belts in the world’s leading economies tighten, we may well see India’s economy – and the confidence of its consumers – soar.
Portugal, Korea and Japan languished at the bottom of rankings as the world’s most pessimistic nations.
Job Prospects & Personal Finances
Indians are optimistic about the local job prospects over the next twelve months. With 86 percent, Indians are the second most optimistic people where the job market is concerned over the next 12 months. 26 percent of Indian respondents consider job prospects in the country ‘excellent’ and 60 percent respondents consider the job prospects ‘good’.
Promising job prospects for Indians over the next twelve months makes them confident about their personal finances over the same period. 12 percent of Indian respondents consider their state of personal finances ‘excellent’ and 67 percent consider it ‘good’ in the next twelve months. At 79 percent in this positive frame of mind, India along with Denmark and Indonesia figures in the list of the most optimistic countries where personal finances are concerned.
“Inspite of an alarming inflation rate, India is still a growing economy with the GDP ranging around 9%. There is still demand for talent in the market and especially with the entry of various multinational brands the job market looks lucrative,” continued Panchal.
Good job and financial prospects have sufficiently loosened the Indian purse and 45 percent of respondents surveyed are optimistic that it is the perfect time to buy things that they would want or need.
“Indians are shopping more and are buying well known brands as seen in the recent Luxury Brands survey done by Nielsen, where India figured amongst the top three most brand conscious countries of the world. This shows that good jobs, hefty pay packages, and global exposure to lifestyle are pushing the Indian consumer towards luxury items. So even when there is an economic recession globally, Indians are splurging and are optimistic about their finances,” added Panchal.
In recession now, or heading that way
58 percent of Indian respondents do not think that their country is in an economic recession now. When asked, out of these 58 percent, 38 percent consider a global recession likely to hit India in the next twelve months. Regionally in Asia Pacific, two in five (42%) of consumers believe that their country is currently in the midst of a recession.
During times of economic slowdown, Indian consumers rank inflation as their biggest concern (69%), this being the tenth highest percentage globally for a country worrying about inflation.
“India's inflation rate of 8.1 per cent is the highest in several years. The rising prices of international crude oil, food, and other manufactured goods have resulted in such high inflation rates. In a country where economies are growing on an unprecedented scale, concerns about inflation are understandable as this may mark a stop in the Indian growth story” said Panchal.
Other concerns bothering Indians in case of a downturn in economy are unemployment (46%), interest rate rises (44%- 7th highest globally), political instability (29%), falling property prices (12%), civil conflicts (11%), and strikes (9%).
The spare cash kitty
Compared to the last leg of the survey, the percentage of people putting their spare cash into savings has increased by 5 percent and the percentage investing in shares and mutual funds has dropped by 3 percent.
It is interesting that despite a downturn in economy, concerns about inflation, etc., the percentage of Indian respondents who do not have any spare cash after their monthly essentials have been paid for has remained the same 4 percent, same as the last leg of the survey. This shows that majority of Indian consumers have money left even after meeting their essential expenses.
Savings are still a priority for Indians and 59 percent of Indians put their spare cash into savings, 48 percent invest in shares of stock and mutual funds, this being the fourth highest percentage globally.
“Today Indians are more careful of the financial risks that they want to undertake. The fluctuating market conditions has curbed the risk taking behaviour and has made Indian consumers opt for savings rather than take a chance with their money on the market,” continued Panchal.
Spending on holidays and vacations has increased by 4 percent to 37 and shows the growing interest of Indians to travel and see the world.
Incidentally the amount spent on home improvements (27%) and new technology (27%) has been impacted by the rising inflation rates and they have dropped by three and two percentage points respectively.
Paying off debts/credit cards/loans (35%), new clothes (34%), out of home entertainment (28%), and retirement fund (22% - fifth highest globally), are some other areas where Indians spend their spare cash on.
About The Nielsen Global Online Consumer Survey
The Nielsen Global Online Consumer Survey, conducted by Nielsen Customized Research, was conducted in April 2008 among 28,253 internet users in 51 markets from Europe, Asia Pacific, North America and the Middle East. The largest half-yearly survey of its kind, the Nielsen Global Online Consumer Confidence and Opinion Survey provides insight into current confidence levels, spending habits/intentions and the major concerns of consumers across the globe. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing information (ACNielsen), media information (Nielsen Media Research), online intelligence (NetRatings and BuzzMetrics), mobile measurement, trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters in Haarlem, the Netherlands, and New York, USA. For more information, please visit, www.nielsen.com
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