Global consumer confidence in the first quarter of 2010 rebounded to reach its highest level since the third quarter of 2007, providing the most definitive sign that the world is beginning to recover from the recession, according to the latest edition of the Nielsen Global Consumer Confidence Index. As the world`s consumers started to spend again, they drove the global index up to 92 points (100=average) in the first quarter. This represents a six-point increase from six months ago and only two points short of the 94-point index mark in Q3 2007, just prior to the decline into world recession. Consumer confidence indices in Saudi Arabia (108), United Arab Emirates (103), Egypt (95), and Pakistan (92) continue to be high, while South Africa (84) is below the global average. Saudi Arabia`s oil-based economy accounts for almost half its GDP and 90 percent of its export earnings, which enables greater infrastructure spending and overall economic growth. While South Africa and the United Arab Emirates generally believe that the worst is over, recovery is expected to be slow. Shoppers are making fewer trips to the store and making trade-offs for private-label store brands.” Himanshu Vashishtha, the managing director of Nielsen in Dubai, said shoppers would continue to be cautious but might spend more on such items as travel, on which they had been cutting back. “It's not back to the golden days of the UAE, which was in the 112 range, but it is stable,” he said. “People will watch and wait and they think we are in recovery. We also think we're on the road to recovery.” The 11-point rise takes the mood in the UAE past the 100-point neutral mark back into positive territory. Consumer confidence hit an all time low of 77 index points in early 2009, following the collapse of the international financial system, before steadily increasing again last year. Consumer confidence rose in 41 of the 55 countries surveyed during the quarter, with India (127 index points), Indonesia (116) and Norway (115) remaining the world`s most confident nations. Meanwhile, Lithuania (46), Croatia (48), and Portugal (51) were the most pessimistic nations. Taiwan (+14 pts), Singapore (+11), Mexico (+10) and Colombia (+9) were among the highest increases in consumer confidence in Q1, while Greece (-15), in the midst of a financial collapse, recorded the steepest decline. “Conventional wisdom was that there would be a slow recovery and there have been several signs of stabilization and green shoots in the past 12 months, but Q1 of this year presented the first global show of force towards economic recovery,” said Dr. Venkatesh Bala, chief economist at The Cambridge Group, a part of The Nielsen Company. “For the first time in two years, Nielsen`s global consumer data provides evidence that economic prospects are improving-a sign manufacturers and retailers have been eagerly waiting for that consumer spending intentions are turning into actual spending reality.” Nielsen`s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending intentions among more than 27,000 Internet users in 55 countries. In the latest round of the survey conducted between March 8 and March 26, 2010, consumer confidence in many markets rebounded to pre-recession levels of late 2007 and early 2008. Additionally, over the past year, the number of global consumers who believe they are currently in recession dropped 19 points to 58 percent, compared to 77 percent a year ago. All global regions posted positive increases in consumer confidence, but the pace and extent of economic recovery further widened between the booming Asia Pacific and Latin American countries compared to the sluggish recovery in the United States and western Europe. “Asia Pacific consumers-who were among the first to cut back drastically on discretionary spending 18 months ago-are now confident enough to spend their way into higher growth,” said Dr. Bala.” Likewise, in Latin America, while consumers have been cutting back spending on discretionary items, the FMCG industry has been gradually recovering as consumers increase spending on essential goods, according to Nielsen data. In addition, expected GDP growth and lower inflation has renewed optimism in most of the region`s countries. “In contrast, the US and Europe are likely to see a period of slow demand growth in conjunction with a largely jobless recovery in the US, and in the case of Europe, added uncertainty from the ongoing sovereign-debt crisis,” said Dr. Bala. “Due to consumers` limited household spending, uncovering new areas of growth will be important for retailers. Consumer product companies will require a high degree of precision in targeting, value propositions and pricing in order to generate topline growth and profitability.” The jumps in global consumer confidence and reinvigorated spending habits have been driven by improved confidence for jobs and employment, which has steadily risen in the past six months. In Q1 2010, 43 percent of global consumers described their job prospects as excellent/good compared to 35 percent six months ago. In addition, one in three global consumers said they are planning to increase spending for out-of-home entertainment, new clothes and new technology over the next six months. “Asia`s rapid recovery and bright prospects makes this booming region a high priority for resource allocation for manufacturers and retailers, including tapping into the large and growing number of middle-class consumers,” said Dr. Bala. “Developing an appropriate portfolio of product and services and targeting them accordingly will continue to be important, both for the sake of profitability and for ensuring a vibrant brand presence and continued strength in the long run.” Among the world`s cautious markets, many of the habits developed during the recession continue. Price sensitivity, private labels and promotions are still top-of-mind to the value-conscious consumer, although there are signs that they want to resume some discretionary spending. “Americans are still extremely cautious about spending given the uncertain nature of the recovery in the US and the continued level of high unemployment. They remain committed to managing controllable costs such as gas and utility bills, and they continue to focus on repairing their balance sheets,” said James Russo, vice president, Global Consumer Insights at The Nielsen Company. “That said, they are expressing a desire to spend more on discretionary items such as out-of-home entertainment, apparel and vacations-a noticeable shift in this survey. A huge opportunity exists for manufacturers, marketers and retailers who know how to reach the right consumers in the most effective way.” “Nowhere is the return to consumption and shopping habits more evident than in Asia Pacific where consumers have indicated they are ready to spend,” said Christophe Cambournac, president of The Nielsen Company`s Asia Pacific, Middle East and Africa region. “Asian consumers cut back drastically on all aspects of discretionary spending 18 months ago, but have now indicated they plan to increase spending on out-of-home entertainment, new technology, holidays and new clothes compared to six months ago.” Asia Pacific posted highest confidence increase of all regions (+8) due in part to big jumps in Taiwan (+14) and Singapore (+11).
