(SINGAPORE) Consumer confidence in Singapore hit a new high in the first quarter of 2010 - confirming Singaporeans as the most upbeat consumers in the region.
The Consumer Confidence Index, measured by InsightAsia, increased 14 points for a second straight quarter, to 138.
InsightAsia, one of the Asia-Pacific's leading market research groups - specialising in quantitative, qualitative research, brand development, business analytics and consultancy - continuously surveys 10,800 people across six Asian countries on an annual basis.
The surge in the Singapore economy is quickly becoming a textbook example of V-shaped recovery. GDP growth was above 7 per cent before the global recession but plunged to minus-9.6 per cent in the first quarter of 2009. Since then, the economy has made a remarkably strong comeback.
The government has not yet released more than a provisional estimate for growth in Q1 2010, but analysts expect it to be between 10 and 20 per cent. Growth for the quarter is calculated on the base of the low point in Q1 last year, and therefore will not be sustainable throughout 2010. Still, these forecasts illustrate the strong momentum of the Singapore economy.
Singapore has an advanced economy with well-developed technology and financial service industries, as well as a fast-growing tourism industry. The Singapore economy is built on strong foundations and the future looks bright - an outlook reflected in the attitude of Singaporean consumers.
Manufacturing output has been boosted by trade with advanced economies that are restocking after they cut their inventories in the midst of the economic crisis. The service industry is thriving too, resulting in a sharp fall in unemployment. The official government forecast for GDP growth in 2010 has been revised to 7-9 per cent, from 4.5-6.5 per cent.
Consumer confidence is also buoyant. At the low point of the recession in Q1 2009, the Consumer Confidence Index was 62 - far below the neutral level of 100. Following the first signs of recovery in Q2, the index started a steep upward trend that continued into Q1 2010, taking it to 138 - a figure that indicates an extremely upbeat outlook. Consumers are positive about the economy, their financial well-being and making major purchases.
All countries in the region have overcome the economic downturn. Their projected growth for 2010 is positive and exceeds that of 2009. As economic prospects have improved in China and South-east Asia, so has consumer confidence. Yet no country surveyed demonstrates such a sharp increase in consumer confidence as Singapore.
In Q1 2009, Singapore had the lowest consumer confidence score, trailing the nearest country in the rankings by 10 points. A year later, the island state leads the rankings after its index jumped from 62 to 138 in just 12 months. Consumers in Vietnam (132), China (125) and Malaysia (125) are also upbeat about economic conditions. But confidence in Indonesia (94) and Thailand (93) remains below the neutral point, largely due to negative views of the current economy.
Although growth forecasts are positive in China and Southeast Asia, developing economies must implement structural reforms to sustain long-term progress. The impact of government stimulus packages will fade, and as there is a limit to the growth potential of exports, associated economic benefits will level out. It is therefore imperative that the governments of developing economies demonstrate strong political leadership to implement new policies. This introduces an element of uncertainty into the growth forecasts for developing economies.
The writer is Head of Consumer Confidence Index at InsightAsia Research Group. He can be contacted for more information about the report at consumerconfidence@insightasia.com. Free top line reports and more detailed reports can be downloaded at www.insightasia.com .
Source: Business Times, 3 May 2010
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