In another sign of the country recovering fast from the recent economic downturn, consumer confidence in India has rebounded in the first quarter of 2010 to reach its highest level since the third quarter of 2007.
According to the latest edition of the Nielsen Global Consumer Confidence Index, conducted from March 8-26, 2010, India, with 127 index points, ranks number one in the recent round of the survey, followed by Indonesia (116) and Norway (115).
Consumer confidence rose in 41 of the 55 countries surveyed during the quarter. 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 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.
“The rising confidence index shows a rebounding faith in economy and hope for a more optimistic future. India is one of the fastest growing markets in the world and the current consumer belief that recession would soon be a thing of the past has filled Indians with confidence,” says Piyush Mathur, MD-South Asia, The Nielsen Company.
According to the survey, 42 per cent Indians think the country is under recession at the moment. Of these, 68 per cent Indian consumers believe the country will be out of recession in the next 12 months, making India the most optimistic country globally believing that recession will be a thing of the past in a year’s time.
Lithuania (46), Croatia (48), and Portugal (51) were the most pessimistic nations. Taiwan (+14 pts), Singapore (+11), Israel (+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.
Optimism reigns high in India
India retains its number one spot — with 91 per cent votes — as the most optimistic country as far as job prospects are concerned. Twenty-five per cent Indians think job prospects in the country will be “excellent” and 66 per cent think it will be “good” in the next 12 months. With 76 per cent votes, Singapore follows India in its optimism about job prospects.
Indians also emerge as “most optimistic” about the state of their personal finances in the next 12 months. In the last round of the survey, wherein Indians were glum about their personal finances, in the latest round they have emerged as the most optimistic with 84 per cent votes. Fifteen per cent Indians think personal finances will be “excellent” and 69 per cent think it will be “good”. Indians are followed by Indonesia (77 per cent) in their optimism about the state of personal finances in the next 12 months.
More than half of the Indian consumers surveyed (52 per cent) believe it is an opportune time to buy things they want and need, considering the cost of items today and their state of personal finances. Of these 52 per cent, eight per cent think it is “excellent” time to buy items they want while 44 per cent think it is “good” time to make purchases.
“The Indian job market is opening up, which also means finances are improving with better jobs and more people now have the power to spend on discretionary items. So it’s not a surprise that Indians think the time is ripe to spend on things they desire,” says Mathur of The Nielsen Company.
Spare cash is for spending
With the signs of downturn fading, Indian consumers have loosened their purse. After meeting their necessary living expenses, they are putting their spare cash into savings, a favourite for many of those surveyed, but the percentage has gone down by 5-60 per cent compared to the last leg of the survey.
Indians have also become more daring and are investing in shares of stock and mutual funds. More than four in 10 Indians put their spare cash into stocks (43 per cent). This is the fourth highest percentage globally for a country to invest its spare cash in the stock market. The Chinese are the most daring when it comes to investing in the stock market with more than half of the consumers (52 per cent) investing in shares and mutual funds.
After saving and investing, Indians like to spend their spare cash on holidays/ vacations (38 per cent). This takes the third spot on the spending list of Indians, pushing down buying new technology products (35 per cent) to the fourth spot in the last round of the survey. However, Indians still rank sixth in their willingness to buy new technology products.
Other areas where Indians love to spend their spare cash are on new clothes and home improvements/decorating (both 32 per cent), paying off debts (29 per cent), out of home entertainment (23 per cent) and retirement fund (22 per cent).
“Old habits die hard, and savings seems to be one of them. But who is complaining, it did help to wade us out of the recent economic downturn. Having said that, we see a lot more investment by Indians in the stock market and in personal activities, which is a sign of a recovering economy and more importantly a recovering consumer mindset more attuned to making purchases than hoarding up available resources in fear of a gloomy future,” said Mathur.
Nielsen’s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending intentions among more than 27,000 internet users in 55 count