THE NEILSEN CONSUMER CONFIDENCE INDEX
Buyers turn shy

Rising oil prices, the spread of the sub-prime credit issue in international markets and the predicted slowdown in the US economy are all taking their toll on the confidence of global consumers. According to the latest Global Consumer Confidence Study conducted by The Nielsen Company, more than a quarter of global consumers expect a recession in 2008, resulting in a dip in confidence in 21 of the 48 markets Nielsen surveyed as part of its project. Thailand, Taiwan, Italy and Latvia lead the pack, with the people there anticipating a global recession in the next 12 months. Also, among the top ten is Turkey. Globally, over 50 per cent of the people are concerned that a recession will lead to unemployment and inflation.

But for 40 per cent of the world’s consumers, there is unlikely to be a global recession next year. And, leading them are the two fastest developing countries – China (69 per cent) and Vietnam (66 per cent). It is a view echoed by Russia also, with over 53 per cent not seeing recession on the horizon.

“In the world’s leading economy, the US, consumer confidence has seen a continual decline from late 2006 on the back of a number of negative economic indicators, such as the anticipated slowdown, a weak US dollar, rising oil prices and the sub-prime issue, all creating increased debt for consumers,” said George Mikaelian, Managing Director, Nielsen, Bahrain, Oman, Qatar and Kuwait. “The unfavourable economic environment in the US is clearly having an impact on economies in the rest of the world, resulting in less upbeat consumer sentiment elsewhere”. Established in 2005, the Nielsen Global Consumer Confidence Index shows a continuing decline in global consumer confidence, with an index of 94 in the second half of 2007, down from 97 in May 2007, and 99 in the same period of 2006.

Top 10 Ranking
Globally, Norway superseded India as the world’s most optimistic market, with a CI score of 135, up two points from the May survey. India ranked second at 133, down for the third consecutive round from its peak score of 137 in late 2006. Scoring 124, this time round, Denmark was ranked a distant third, a position it has maintained for the past three rounds of the survey. In the Eastern Europe Middle East & Africa (EEMEA) region, UAE and Pakistan are the most optimistic markets, ranked 11th worldwide scoring 112 points. Another indication of belt-tightening is the fact that 13 per cent of global consumers, said they had no spare cash after covering basic living expenses; and nearly two-thirds opined that it was not a good time to spend on things they want, putting holiday spending in doubt for the upcoming festive season. Across EEMEA, Egyptians, Turks, South Africans and people from the Baltics (Estonia, Lithuania and Latvia) were among the most cautious about discretionary spending, with around eight in 10 thinking now was not a good time to buy the things they want, in stark contrast to Pakistan and the UAE where over 45 per cent were optimistic about spending in the next 12 months.

“Consumers around the world are cautious about spending – of the 48 markets surveyed, 26 recorded a continuing decline in their readiness to spend compared to six months ago – an important signal for retailers, who will need to put in the extra effort to entice consumers to loosen their purse strings with the festive seasons of Christmas and New Year,” added Mikaelian.

Major Concerns
Irrespective of a global recession, consumers continue to worry most about the economy (47 per cent), health (37 per cent) and job security (30 per cent) in the six months ahead. Taiwan (74 per cent) tops the world with most people concerned about the state of the economy, followed by China (71 per cent) and Latvia (69 per cent)). In fact, seven of the top 10 markets most concerned about the economy were from the Asia Pacific region; the remaining three were from the EEMEA region: Latvia, Lithuania and Russia. Among the EEMEA markets, people in Latvia and Estonia (44 per cent each) were most concerned about their health; while Egypt (45 per cent), and the UAE (41 per cent) ranked among the world’s top 10 most concerned markets about job security in the next six months.

The Least Optimistic
The world’s most pessimistic consumers hail mainly from Europe and leading them are consumers from Turkey (74 per cent), Egypt (66 per cent) and Greece (65 per cent).

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