The global consumer confidence in India is at peak. This was revealed in the latest Conference Board Global Consumer Confidence Survey, which is conducted in collaboration with Nielsen. The survey which was conducted over the internet, polls more than 32,000 consumers in 64 countries across Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America.
India had a Consumer Confidence Index (CCI) score of 133 in the fourth quarter of 2018 edging past the Philippines (131) and Indonesia (127). India maintain its number one position from the third quarter when it scored 130 on the index whereas Philippines and Indonesia were joint fourth in Q3 of 2018 with an identical score of 126.
South Korea has the most pessimistic consumers in the world. People there are worried about rising inflation, lower wage growth, a weak stock market, unemployment and global trade uncertainties.
Meanwhile, the Global Consumer Confidence Index increased one point to 107 in fourth quarter of 2018, the highest in 14 years.
The main indicators measured by Conference Board CCI are optimism towards job prospects, health of personal finances and spending intentions in the next 12 months.
Globally, consumers perceptions towards job prospects and personal finances remain positive but consumer sentiment towards spending remain low and less optimistic because of anticipated higher prices due to higher oil prices creating inflationary pressures, uncertainty with regards to global trade, falling currency and rising interest rates affecting borrowing costs.
With the exception of North America where consumer confidence is at its highest for years, developed economies are generally less optimistic. With a reading of 100 on the CCI considered positive, European consumers tended to be the least optimistic with an average score below 90. Whereas their Asian and North American counterparts tended to be more upbeat. Consumers in the Latin America, Middle East and Africa are considered to be cautiously optimistic with a score in the nineties, but all regions have seen improvements in consumer confidence in the last year.
The survey shows the CCI in the Asia-Pacific increased three points to 117. Major markets such as China, India, Indonesia and Japan all improved. Although the CCI for Asia-Pacific is generally good, people in the more mature economics like Australia, New Zealand, Singapore and Hong Kong are more cautious about their spending but these countries continue to offer good opportunities for consumer businesses.
While consumer confidence remains high in China, there are signs from retail spending data that consumers are spending less – an impact as a result of trade tensions with the US. The residents in the second largest economy in the world are also beginning to be less positive about jobs.
On balance, consumers globally are somewhat more confident compared with a year ago.
The global uptick in confidence is a positive sign for economic and business growth in 2019. Consumer confidence surveys are seen as a proxy measure to gauge short term demand by assessing people’s views on the economy. A positive trend indicates the possibility of higher spending by consumers in the short-term and that may boost economic growth.
However, several economic headwinds are expected to affect global GDP like the yet unresolved trade dispute between China and the US, rising interest rates, inflationary pressures and uncertain oil prices.
Indeed, some economists expect that GDP growth will moderate in 2019. Fears of significant pullback of global trade could undermine growth outlook for both emerging and mature economies particularly those that depend on global trade.
This is after a steady rise in GDP in recent years despite trade fears, fluctuating oil prices and worries about the impact of Brexit. According to International Monetary Fund data, real global GDP growth has been inching up since 2015 at a rate of between 3.3 percent in 2016 to 3.7 percent in 2018. However, growth is not even with emerging markets growing at a higher rate of 4.7 percent in 2018 compared with 2.4 percent in the advanced economies.
For India, the results of this survey mirrors a Reserve Bank of India (RBI) survey released in early February which indicates that consumer confidence in India is at a two year high. The RBI survey was conducted across 13 major Indian cities.
The rise in consumer sentiment is likely due to inflation hitting an 18-month low in December as oil prices stabilised and the rupee appreciated.
Although 76 percent of respondents in the RBI survey expect inflation to rise in 2019, consumers say they expect a rise in income and employment opportunities in the same period.
The results of this survey come at a time when PM Modi’s government is facing criticism due to a lower job creation rate resulting in unemployment touching a 45-year high in 2017-18 according to the National Sample Survey Office’s periodic labour force survey released recently.
Going forward, India’s consumer confidence may be dampened by poorer macroeconomic fundamentals like a weak currency, widening deficits, rising prices, mounting bad loans and stricter credit conditions. However, this impact is expected to be buffered by ramped up government spending and social programmes leading to the general elections.