How long can one escape the clutches of the present global economic crisis? While the world went into an economic slowdown towards the end of 2008, Indians have just started losing confidence in their economy. In recent times consumers have experienced an onslaught of bad news in the form of job cuts, company profits plummeting, bankruptcies and foreclosures, which has led to a reduction in consumer confidence and people’s spending power. Consumer Confidence in India has finally started to reflect the sentiments of consumers’ in the rest of the world.
India witnessed a fifteen point drop in Nielsen’s Consumer Confidence Index and ranked third with 99 points, behind Indonesia which topped the Confidence rankings with 104 points and Denmark, which came second with 102 points. India had ranked No.1 in the Nielsen Consumer Confidence ranking in the last round of the survey in October 2008.
The latest Nielsen Global Consumer Confidence Survey, (conducted 19 March – 2 April 2009), saw consumer confidence across countries take a beating, falling seven Index points from 84 to 77 in the latest round of the survey. Consumer Confidence fell in 49 out of the 50 countries surveyed; Taiwan was the only country to break the global trend, edging up three points from 60 to 63. A twice yearly study, the Consumer Confidence survey tracks consumer confidence, major concerns and spending habits among 25,140 Internet users in 50 countries.
Despite consumer confidence taking a dip in India, it is also true that most Indian respondents are quite optimistic about the situation changing in the next twelve months. 56 percent of Indians think the country will be out of the economic crisis in the next twelve months – the second highest percentage for a country globally, behind Vietnam with 60 percent.
Indians still among the optimistic ones
Consumer Confidence in India may have fallen but it is not yet vanquished. Compared to other countries in the Nielsen survey, India remains quite an optimistic country. 47 percent of Indians have an optimistic perception about local job prospects in the next twelve months, with six percent considering them to be ‘excellent’ and 41 percent considering them ‘good’. Indians are the second most optimistic behind Indonesia (with 54 percent), when it comes to job prospects over the next twelve months. The growth prospects in India are better than most other countries at the moment.
The optimistic outlook about job prospects also trickles down to the state of personal finances of Indians. 62 percent of Indian respondents consider the state of their personal finances to be either ‘excellent’ or ‘good’ for the next twelve months – ranking Indians as the fifth most optimistic lot globally when it comes to the state of their personal finances. While Indians may be fairly optimistic about job prospects and the state of their personal finances in the next twelve months, consumers are not too confident about making purchases at the moment. Only three percent consider the current environment to be an ‘excellent’ time to buy the things that they want or need, while a further 37 percent consider it a ‘good’ time to make those purchases.
Spending spare cash – looking ahead
For Indians today, cash is king. People have become a lot more concerned about their future and their attitude towards money reflects that. They are diverting more cash into items that will give them financial security on a rainy day. With 66 percent Indian respondents voting for it, Putting into Savings remains the most important thing to do with spare cash after covering essential living expenses – ranking Indians the sixth greatest savers globally.
Compared to the last round of the Nielsen Global Consumer Confidence survey, the percentage of Indians putting their spare cash into savings has increased from 58 to 66 percent, reflecting the more conservative mindset of Indians currently. Paying off debts/ credit cards/ loans follows as the second most popular thing to do with spare cash, garnering 38 percent of Indians’ votes, representing a four percent increase compared to the last round of the survey. Investing in shares of stock or mutual funds ranked third for one third of respondents, and witnessed a nine percent drop in comparison to the previous round of the survey.
The list can go like this – new technology products (27 percent), new clothes (27percent), holidays and vacations (25percent), home improvements/ decorating (22percent), are other areas where Indians spend their spare cash, albeit the fact that all have experienced a decline vs. second half, 2008.
Apart from saving for a rainy day, Indians are also tucking away spare cash for a comfortable future. The percentage of Indian respondents putting their spare cash into a Retirement fund has increased from 20 to 22 percent – the fifth highest percentage globally and quite high relative to the global percentage of 10 percent in putting spare cash into Retirement funds.
Indians have become more conscious about the way they handle money. The uncertain economic future is preventing Indians from taking risks on the stock market. It is also acting as a push for Indians to get their liabilities, in terms of debts and loans, behind them as fast as possible. Indians are saving as much as they can at the moment to ensure they have a nest egg behind them in case they need to dig into it at a later date.
Other concerning facts
Fears of unemployment and job security have reached new heights, with global redundancies affecting every industry. But under the current scenario, Indians are more worried about their own jobs than they are about what is happening in the overall economy elsewhere.
For more than two in five Indians (44percent), ‘Job Security’ tops the list of major concerns in the next six months – ninth highest percentage globa