MANILA, Philippines – Consumers in the Asia Pacific region remain optimistic but confidence is falling in a number of markets, with the Philippines being one of the few very optimistic markets in the region.
Based on a survey conducted by MasterCard, the level of optimism is beginning to recede in a number of markets coming off the back of a 10-year high in optimism levels in the second half of 2014, and reflects an increasingly uncertain economic outlook.
Asia Pacific markets remain optimistic with the level of optimism at 66.1 index points in first semester of 2015 compared to 68.3 Index points in the same period last year, according to survey.
“This stability reflects the fact that the most pessimistic markets are showing signs of improvement while the most optimistic are showing decreased confidence,” the MasterCard Index of Consumer Confidence survey said.
In Southeast Asia, the Philippines index stood at 81.4 points, Singapore (65.3 index points) and Vietnam (86.9 index points) remain stable with increases of less than five points.
But the 44.9 index points of Malaysia moves further into pessimistic territory with a drop of five points.
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MasterCard said Indonesia, Thailand and Myanmar remain generally optimistic but consumers have shown significant deterioration in their confidence from very high levels just six months ago.
There is still significant variation between markets in the region.
Matthew Driver, group executive, Global Products and Solutions, Asia Pacific, MasterCard, said consumer confidence is a more nuanced story for Asia Pacific in 2015 as economic uncertainty has begun to impact more developing markets.
India is now the only market in Asia Pacific in which consumers are extremely optimistic about the future.
Australia is the only pessimistic market at 39.5 index points, while India, with 93.1 index points is the only market in Asia Pacific in which consumers are ‘extremely optimistic’ about economic prospects over the next six months.
Australia, Taiwan, and Japan showed improvement in consumer confidence. However, they started off at either a pessimistic or neutral base.
Consumer confidence in China and Hong Kong remained optimistic.
The survey was conducted between May and June, before the fall in the Chinese stock markets.
There was no indication that confidence in the stock market would fall, and in the survey, the local stock market component is in optimistic territory at 81.3 Index points for China and 80 Index points for Hong Kong.
Meanwhile, Indonesia showed the greatest decline in confidence levels of all the markets surveyed with a 25.8-point drop to 64.3 index points led by large decreases in confidence in the economy (or a drop of 31.6 points) and the stock market (a drop of 29.7 points).
Bank Indonesia’s own consumer confidence index also shows falling numbers due to shrinking job availability as well as declining income and business activity.
The same is true in Thailand with a weaker 72.8 index points or a significant deterioration or 10.9-point.
The outlook on the economy fell 15.3 points and employment slipped by 12.5 points contributed most to the drop.
The 81.6 index points recorded in Myanmar’s consumer confidence posted a 15.6 point decrease moving it out of the 94 plus (extremely optimistic) territory for the first time since MasterCard started surveying the country in 2013.
The decrease was led by declining optimism regarding the local stock market (local property market for Myanmar) at a lower 31.8 points.
Bangladesh falls eight points to 75.3, driven downwards by a 21-point decline in confidence in the outlook of the local stock market (46.5). Sri Lanka makes its debut in the Index of Consumer Confidence at 67.5 putting it in optimistic territory.
Consumer confidence in Japan showed extreme improvement, increasing by 22.3 points.
Solid economic growth in the first quarter and increased tourism spending from overseas is supporting the retail sector.
According to MasterCard’s latest Global Destination Cities Index, two of the fastest growing tourist destinations in the world since 2009 are in Japan, Osaka and Tokyo.
India’s consumer confidence remains in extremely optimistic territory at 93.1 index points, up 1.5 points. It is the only market among the 17 that is above 90 points.
Driver said the energy that Prime Minister Modi has brought to his reform agenda is being well received and having meaningful outcomes.
Indeed the International Monetary Fund (IMF) is forecasting that India’s economy will grow 7.5 percent this year, outpacing China for the first time since 1999.
“Chinese consumers also continued to be optimistic and with the survey period ahead of the recent stock market adjustments, were even more confident than in 2014.
In comparison there was a significant moderation in consumer sentiment in a number of markets in Southeast Asia as the economic outlook has softened specifically Indonesia, Myanmar and Thailand, all of whom recorded double digit declines in confidence. There were also further falls in Malaysia,” the Asia Pacific group head added.