07 November 2008
Malaysians have felt the full brunt of the global financial meltdown with 68 percent of consumers saying that the country is in recession, and consumer confidence is at an all time low according to the recent global survey released by The Nielsen Company.
Malaysians have felt the full brunt of the global financial meltdown with 68 percent of consumers saying that the country is in recession, and consumer confidence is at an all time low according to the recent global survey released by The Nielsen Company.

A twice yearly study, the Nielsen Global Consumer Confidence polled 26,202 consumers in 52 countries in the midst of the global financial crisis, with 500 Malaysians across all ages interviewed from 23 September to 6 October 2008 about their confidence levels and economic outlook since the last survey in May 2008.

The Nielsen study provides the most current insights into the impact of the global financial turmoil on worldwide consumers and continuously track the changes in consumer sentiment since the inception of the Consumer Confidence Index in 2005.

“The far reaching consequences of the global financial turmoil has quickly hit home for Malaysians. They are worried about the economic climate as borne out by a Malaysia Consumer Confidence Index that dropped to a low of 88 in the latest survey, just slightly ahead of the global average of 84 but down nine points from the first half 2008, or cumulative 13 points from the same period in 2007,” said Paul Richmond, Managing Director, The Nielsen Company Malaysia.

When asked how they would spend their spare cash after covering daily essentials, a whopping 67 percent of Malaysians said they were saving for a rainy day. Another 46 percent will pay down their credit card debts and loans. Surprisingly enough, one third of Malaysians will still go on vacation to reward themselves despite the tough times. Some 30 percent of Malaysians will put their money into the stock market or unit trusts despite the current financial turmoil. Whilst the local stock market has been battered, savvy investors may see it as a golden opportunity to pick up some blue chip stocks going cheaply.

“Despite a cloud of uncertainties, Malaysians still know how to have a good time and holidaying is the best way to recharge and face the challenges ahead. The interest in the stock market and unit trust products also shows the maturing mindset of the Malaysian investing public who believe in longterm value over short term gains,” said Richmond.

Commenting on their major concerns over the next six months, 43 percent cite the state of the economy followed by political stability (32%) and increasing food prices (18%). It is worth noting that Malaysians’ concern about political stability also tops their counterparts in Asia Pacific this time round and presents a sharp contrast to the results of the first half survey in May which saw Malaysians rate inflation (58%), personal safety and crime rate (52%) and fuel price (45%) as their top three concerns.

Close to half concede that their job and finance prospects are not too rosy in the next 12 months, in line with the global trend of two in five (48%) describing their financial status as poor a clear indication that extravagant spending sprees aren’t on the cards in the near future.

The current economic uncertainty coupled with the rising cost of living are leading Malaysians to change their lifestyle and spending patterns. As the survey reveals, the top five ways Malaysians are taking to cope with the rising cost include cutting down on new clothes (62%), cutting down on out-of-home entertainment (57%), saving on gas and electricity (54%), delaying any upgrade of technology gadgets such as mobile phone and personal computers (49%), and switching to cheaper grocery brands (43%). The Nielsen Malaysia Retail Audit which tracks 75 Fast Moving Consumer Goods Categories showed that the average price movement year-on-year for Total Grocery is 12%. The Food categories have seen an average price increase of 15% versus the Non Food categories maintaining prices. In fact, items like rice and full cream powdered milk has seen price hikes of 41% and 34% respectively.

"Staying In has become the new Going Out for a new breed of credit crunch consumers,” said Richmond “And while restaurants and bars may already be feeling the pinch, the “stayin” trend is providing room for innovative at-home entertainment options as well as at-home food and beverage products, along with premium and prepared food ranges specifically aimed at home entertaining”. Richmond commented that even during economic slowdowns, gaps and opportunities abound for savvy marketers. “Companies that continue to invest in their brands and products and stay constantly engaged with their target market will come out of this downturn as winners.

Consumers today will remember the companies and products which best understood their changing needs and demands during a slowdown. For marketers, brand investment during a downturn has never been more important to drive and secure brand loyalty for better days ahead,” he added.

THE NIELSEN GLOBAL CONSUMER CONFIDENCE SURVEY – OCTOBER 2008

Although consumer confidence declined across all global regions in the last five months, Latin America remained the most optimistic region, with a regional Consumer Confidence Index average of 96.8, followed by EMEA at 88.5 and Asia Pacific at 85.1. Consumer confidence in North America fell 2 points to 83 while Europe fell five Index points to 77. The global Nielsen Consumer Confidence average fell four Index points from 88 to 84 points.

Despite a drop of eight points in the past five months, India (114) and Denmark (112) came out on top of global Consumer Confidence rankings this month, while South Korea, which saw its stock market close at its lowest since October 2005 recently, languished at the bottom of Consumer Confidence rankings at 36 points, a loss of 14 points in the last five months. Norway, the world’s most optimistic nation in May this year, dropped to fifth place this month with a Consumer Confidence decline of twenty points. Sweden also dropped 14 points. Singapore, Chile, Ireland and Latvia recorded further double digit declines in Consumer Confidence for the second time this year – a clear reflection of the global nature of this economic slowdown.

The only nations which recorded marginal increases in consumer confidence were Brazil (4 points), Philippines (3 points) and New Zealand, China, Venezuela, Thailand and South Africa gained one point
compared to five months ago.







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