In a scenario where consumer confidence across the world has taken a dip, India has topped the Nielsen Global Consumer Confidence Index with 114 points. Moreover, at 51 percent, Indians are also the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months.
A twice-yearly study, the Nielsen Global Consumer Confidence study polled more than 26,000 consumers in 52 markets about their confidence levels and economic outlook.
“Despite the global economic recession Indians seem to be quite confident of the economy picking up in the near future. They believe that the global recession will have limited impact on India where the domestic market is believed to be large enough to support continued growth. Despite global conditions, corporations and consumers are aware that their long-term prospects will remain strong,” said Sonia Pall, Executive Director, Consumer Research, The Nielsen Company.
Conducted in the midst of the global financial crisis, the latest survey reveals that global consumer confidence has taken a further beating, dropping from its peak of 99 in 2006 to 84 this time round. Of the 52 markets surveyed, 43 (or 82%) have recorded a decline in the Consumer Confidence Index from the first half of 2008.
In such conditions it is the fast developing markets that are turmoil-proof with their consumers appearing to be more optimistic, as evidenced by the performance of the BRIC markets – India tops the world as the most optimistic, Brazil and China recorded an increase in their Index score and Russia ranked the 5th most optimistic – all gained pace as the global top 10 most optimistic countries.
Moreover, Indian investors have also been safeguarded by the country’s relatively nascent financial market, where fewer investment options have resulted in savings accounts becoming the principal investment option for many consumers. According to Nielsen’s 2008 Money Monitor, Indians are more comfortable putting their hard-earned money in fixed deposits and saving for a secure tomorrow, than they are spending for a comfortable today.
Despite the decline in Consumer Confidence Index, Indians are quite optimistic when it comes to their perception about Local job prospects and Personal finances over the next twelve months. 16 percent of Indian respondents consider job prospects in the country ‘excellent’ and 59 percent respondents consider the job prospects ‘good’. With 75 percent, Indians are the most upbeat when it comes to local job prospects over the next 12 months.
Indians’ perception about the state of their personal finances over the next twelve months also looks good. Nine percent of Indian respondents consider the state of their personal finances to be ‘excellent’ and 68 percent consider them ‘good’ for the next 12 months. At 77 percent, India emerges as the most optimistic country as far as personal finances are concerned.
“The Indian economy – at six-percent expected growth – still makes for a good job market. Though the conditions might not be as great as they were in the past few years, the growth opportunities in India are better than most other countries at the moment,” continued Pall.
Aside from Indians’ confidence in their job prospects and personal finances over the next 12 months, 40 percent of Indian respondents remain confident that now is a good time to buy things they want or need.
58 percent of Indians still believe in putting their spare cash into Savings, a conservative mindset but one which has buffered Indians in the recent downslide of the financial market. 42 percent Indians invest in Shares of stock or mutual funds, a six-percent drop from the last leg of the survey but still the fourth highest percentage globally.
“Saving for a rainy day is still a priority for Indians but they don’t want to lose out on opportunities to create and recreate wealth. Even in an economic downturn Indians are cautious but still interested in investing in shares and mutual funds if they have spare cash,” said Pall.
Paying off debts/credit cards/loans (34%), New clothes (32%), New technology products (28%), Home improvements/decorating (27%), Out of home entertainment (20%), and Retirement fund (20% – seventh highest globally), are some areas where Indians spend their spare cash.
While Indians’ intentions to spend on personal comforts such as ‘new clothes’, ‘home improvements / decorating’, ‘technology products’ is stronger than the global average, their intention to spend on ‘holidays/ vacations’, ‘out of home entertainment’ is much lower. On the whole, this indicates a general tendency among Indians to live a comfortable life by cutting out the frills.
Holidays and vacations have in fact experienced a steep drop from 37 percent in the last survey to 27 percent this time round. It shows that Indians are less inclined to travel under the current circumstances and are even likely to cut down on their travel expenditure.
The percentage of Indians who do not have any spare cash after covering their essential living expenses increased to six percent from four percent previously.
“There are gaps and opportunities for savvy marketers. Segmenting the market and addressing the high value segments besides the vulnerable set will help tide through the tough times. Investment in brands today is necessary to secure brand loyalty for better times ahead,” said Pall.
Besides Economy (25%), Terrorism (24%) ranks the second major concern among the Indian consumers even before the incident of the recent attack in Mumbai. Indians’ concern about Terrorism actually topped the world consumers when the survey was conducted in October 2008. The level of concern about terrorism is expected to heighten in the next round of the survey.
Work-life balance figured third on the list of major concerns for 21 percent Indians.The major concerns where India figured on the top 10 list globally are Parents welfare and happiness (13%), sixth highest in the world, Global warming (9%), again sixth highest globally and Tolerance towards other religions (5%), the highest percentage for a country considering religious tolerance a major concern.
Other major concerns for Indians include Job security (19%), Increasing food prices (19%), Children’s education &/or welfare (11%), Increasing utility bills (11%), Increasing fuel prices (11%), Health (10%), Political stability (7%), and Debt (7%).