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Consumers are more upbeat about outlook: survey

But sentiments over stock market, quality of life, regular income slide

SINGAPORE consumers are now more bullish about their prospects in the next six months than a year ago, despite the recent spike in market volatility and US sub-prime troubles, according to a MasterCard Survey of consumer confidence in the Asia-Pacific.

The twice-yearly study said the city state posted a confidence rating of 83.6 for H1 of 2008 – higher than the 82.5 reading seen in the year-ago period. This is also higher than the 83.3 rating posted six months earlier.

A score above 50 reflects the extent of optimism, while one below 50 indicates pessimism.

The study also measures consumer confidence according to five indicators – employment, economy, regular income, stock market and quality of life.

Confidence in the employment and economy is up from six months ago, while sentiments on stock market, quality of life and regular income are down.

For example, the employment confidence score was 86.3 – higher than the 83.7 seen six months earlier, and 86.1 a year ago.

Similarly, consumers here gave the economic outlook here a score 88.3, compared with a reading of 81.6 posted half a year ago and the 83.9 posted last year.

In contrast, stock market sentiments dipped to 75.4 – down from 76.6 last year, and the 78.9 scored six months ago.

Similarly, the current confidence in the quality of life dropped to 82.6, compared with 84.8 posted a year ago and 86.9 six months earlier.

MasterCard says the drop in sentiments stemmed from the financial market volatility and rising costs of living.

Elsewhere in the region, the overall outlook on economy (68.3), regular income (81), stock market (66.5) and quality of life (66.7) has improved from the previous survey done in May this year. The view on employment remains constant, the survey adds.

Out of 13 Asia-Pacific markets, MasterCard says 10 posted an increase in consumer confidence levels, with Vietnam topping the charts with a score of 94.3.

This is followed by Hong Kong (85.9), China (85.5) and Singapore (83.6).

‘This latest consumer confidence reading of the region is broadly consistent with the short-term outlook of economic conditions of the key regional markets,’ said Dr Yuwa Hedrick- Wong, economic adviser, Asia-Pacific, MasterCard Worldwide.

However, he remained cautious about the longer term prospects next year, adding that ‘the big uncertainty in 2008 is to what extent those real economic conditions can still stay positive.’

Indeed, he sees an economic slowdown in the US next year, amid a higher correlation between inter-regional Asia exports and US non-oil imports, which had risen six fold in the past 25 years.

Furthermore, there are signs that the European economy is weakening, judging from falling economic indicators like imports, industrial output and retail sales there.

On a four-month moving average basis, the year-on- year growth of imports in September slowed to 2 per cent from 7.8 per cent in July 2006.

Similarly, European industrial output growth slowed to 3.3 per cent in September – down from 4.6 per cent in July 2006.

Therefore, ‘the critical uncertainty next year is China, which is now an important exports market for the rest of Asia,’ Dr Wong said.

‘Depending on its market performance, outlook for the second half of 2008 might be very different.’


Source: Business Times 14 Dec 07


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