India and Norway topped the index at 135 and 132 points respectively, while Portugal and Korea languished once again at the bottom of the Index as the world's pessimists.
“In the six months since the survey was last conducted in October 2006, consumer confidence fell in 35 of the 47 countries covered by Nielsen's global consumer survey. Globally, consumers appear to have erred on the side of caution in the first half of this year,” says Patrick Dodd, president, Nielsen Europe.
“Nearly every global region has experienced some level of political instability in recent months, which will have impacted consumer confidence. Mounting global controversy over the ongoing war in Iraq, the 2008 US presidential nominations, the growing crisis in countries such as Zimbabwe, a new French president and a new prime minister in the UK have made for an action-packed six months for international politics. With so many global changes taking place, consumers, even those in Asia's booming economies, seem unwilling to place any bets on their future economic or financial status,” said Dodd.
The survey polled 26 486 Internet users in 47 markets from Europe, Asia Pacific, North America the Middle East and Emerging Markets about their job prospects, the state of their own finances, and what they do with their spare cash.
The Consumer Confidence Index went up in eight countries – Vietnam, Hong Kong, Indonesia, Canada, Netherlands, Sweden, Italy and Germany – and remained unchanged in Singapore, China and Austria.
South Africa's shift was a result of some positive and some negative changes since the last Consumer Confidence study. On the plus side, local respondents scored fifth highest in terms of feeling extremely positive about the state of their personal finances. However, these extremely positive respondents only comprised 11% of South Africans, indicating that while this belief looks hopeful, it is only held by relatively few respondents.
Job prospects over the next 12 months are not looking all that hopeful: only 46% of South Africans feel that their job prospects are looking good, down from 50% feeling this at the end of last year.
Local respondents came in at number eight of all countries in terms of using spare cash to pay off debt. This could be seen as both a good and a bad finding – bad from the perspective that we are a country with high debt levels, good from the point of view that we pay it off.
Unfortunately we also score high in the bracket of those who have no spare cash left after expenses are paid off, with 14% of South Africans claiming to fall into this category. Portugal experiences this phenomenon worst in this regard, with 25% of respondents having no available cash after expenses.
It must be remembered that this is an online study and hence reflects the feelings/behaviour of respondents with access to the Internet.
The concern over crime remains by far the largest of all concerns within South Africa. Fifty nine percent of locals see crime as either their first or second greatest concern, miles above others such as the next local concerns being the economy (33%) and job security (31%). This concern over crime has increased a percentage against 58% from October 2006. Argentina and Brazil follow as the second and third countries most concerned about crime.
In contrast to this, there are some concerns having great impact to the next of the world, which hardly affect local respondents at all. Only 1% of South Africans cited terrorism as a concern, and only 2% see local civil war as anything on the horizon to worry about.
Moving onto other regions such as Europe, one saw both good and bad news. In the last six months, the consumer confidence index rose six points in Sweden, four points in the Netherlands and three points in Germany, as consumers took the first tentative steps towards economic recovery – but confidence fell five points in the UK – from 96 to 91, the largest fall and its lowest point since the global consumer confidence index began in 2003.
“Consumer confidence in the UK fell for the second consecutive term, down a total of nine index points in the past year,” said Dodd.
“Hong Kong and Sweden were the most optimistic countries in the first half of this year, with a six-point lift, while the biggest loser was Thailand, where consumer confidence plummeted fifteen points. Thais have experienced a volatile 2007 so far,” said Dodd. “Continued political unrest, a spate of violence and deaths in southern Thailand – a region which relies heavily on tourism dollars- and then bombings in Bangkok over Thai New Year, have all contributed to a serious erosion of consumer confidence in recent months.”
Poland, Greece and Portugal also recorded confidence index falls of fourteen points.
Booming India and oil-rich Norway once again topped Nielsen's Global Consumer Confidence rankings, despite recording a two and one-point decrease in confidence indices respectively.
Indian consumer confidence appears to be in line with the release of the country's latest GDP figure this week – 9.4% – the highest growth India has posted in 18 years. It is no surprise, therefore, to see 45% of Indian consumers surveyed rating their job prospects in the next 12 months as ‘excellent'.
In Norway – Europe's most optimistic country – half the population described their local job prospects as ‘excellent' in the next 12 months and 68% rated their personal finances as ‘good'. In Portugal – which has consistently ranked as the world's most pessimistic nation since the Nielsen Global Consumer Confidence Index was launched in 2003 – the gloom continues, with one in five Portuguese consumers (20%) saying they have ‘no spare cash' after paying for essential living expenses.
North America remained the world's most optimistic region, with a consumer confidence index of 107, followed by Asia Pacific at 96 points and Latin America at 95. In Latin America, consumer confidence fell seven points in the first six months of 2007 (from 102 to 95 points).
“While major Latin American economies continue to exhibit robust growth, Latin American consumers continue to struggle with the high cost of credit synonymous with their region,” said Dodd. According to the survey, 41% of Latin American consumers pay off credit cards and loans after covering essential living expenses – the highest regional score for credit/debt repayment.
Europe remains the world's most pessimistic region, with a Confidence Index of 90, seven points below the global average. “With the exception of the UK, most Western European countries have struggled to achieve economic growth in the past few years as governments grapple with high unemployment, an ageing population accompanied by a pension crisis, rising inflation rates and in some countries, an unstable political situation,” said Dodd.
Even the UK, which has enjoyed the highest consistent economic growth in Western Europe this decade, has taken a recent hit with growing economic and social concerns. “Rising inflation and the recent increase in interest rates in the UK have clearly impacted consumer spending in the past six months. One in four Britons (21%) said they have ‘no spare cash' after covering essential living expenses.”
British consumers also topped European rankings when it comes to concerns about crime and immigration. “One in three Britons cited crime and immigration as major personal concerns, reflecting the nation's growing discontent over the changing social landscape,” said Dodd.
