Despite Macro-economic and political uncertainty, “India continues to be the Second Most Optimistic Country in the world” and recorded its highest confidence level since the Fourth-quarter of calendar 2012, a new global study by market researcher Nielsen said…
India’s consumer confidence level increased six points in the first quarter of the current calendar year (January-March) with a score of 121, trailing only Indonesia, the most upbeat country for more than a year with 124 points.
According to the survey, 68% of urban respondents in India feel the country is going through a recessionary phase, and within this 54% say the country will be out of it in the next 12 months…
“Consumers are reconciled to the negative economic conditions and despite the challenge of inflation, are hoping for a better year,” Nielsen India President Piyush Mathur said in a statement. ” They are optimistic that overall sentiment and investment will pick up gradually.”
This flies in the face of the current state of the economy, with growth stuck in a slump and a looming threat in the form of a monsoon that might be below average, possibly adding to inflationary pressures, which, in turn, could mean the central bank will be forced to keep interest rates high.
The survey said three-fourths (74%) of respondents in India are optimistic about job prospects over the next 12 months and sentiment is up by 4 % points from the last quarter.
March quarter earnings don’t reflect too much of the consumer confidence, with most firms including Hindustan Unilever, Godrej Consumer Products and Marico posting muted numbers. “Consumer confidence is high on the hope that a strong government will come in and announce progressive policy decisions.
But actual consumption numbers are not necessarily reflecting this confidence, whether it’s consumer goods, real estate or cars,” said Zubair Ahmed, managing director of consumer goods maker GlaxoSmithKline Consumer Healthcare, maker of Horlicks and Sensodyne toothpaste.
Nielsen said more than half (54 %) of online respondents said it was a good time to buy things they want and need. On the other hand, the intention of online respondents to invest spare cash in savings is up by 6 % points to 68 % from last quarter. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.
Kishore Biyani, promoter of the Future Group, which runs the country’s largest modern retail chain Big Bazaar, expressed optimism that consumption would accelerate over the next few quarters. ” We are a young population which wants to step up consumption across categories. India will continue to grow… We have always been optimistic about that”, Biyani said.
Half the respondents said they are looking to invest in new technology products and buy new clothes. About a third (32 %) indicated they would invest in a retirement fund, a 9 % point increase from last quarter. Further, 36 % said they planned to invest in the stock market and in mutual funds, up from 29 % in last quarter. This is borne out by what’s happening on the stock market. Shares have been on a tear over the past few months on expectations that a Narendra Modi-led BJP will be well placed to form a stable government after the ongoing election.
“Overall discretionary spending is higher than the last FOUR – Quarters and there is a renewed focus on savings for the long term. Consumers are also anticipating the outcome of the elections and the impact will reflect in subsequent months,” Mathur said.
” Stable government leads to consistency in policies which jump start investment across sectors. Increased investment will improve customer sentiment as more employment will be created in addition to increases in Per-capita income leading to increased customer spending,” said Senior Vice President, sales and marketing, Hyundai Motor India. Improved “investment climate and consumerism will bolster business confidence too”.
Indonesia leads the global index with 124 points and the Philippines is third with 116. ” India had been the world’s most optimistic market for nine consecutive quarters until the April-June 2012 period “, when it ceded the title to Indonesia. The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among more than 30,000 respondents with Internet access in 60 countries.
In the latest round of the survey, conducted in the February 17-March 7 period, consumer confidence increased in 60 % of the markets measured by Nielsen, up from 43 % in the preceding quarter !!