Consumer spending to rise in Asia

SINGAPORE -- A robust turnaround in consumer spending is expected in Singapore and across the Asia-Pacific region this year, with retail sales in Singapore, China, Hong Kong, India, Indonesia, Korea and Malaysia set for double-digit growth as a result of improving fundamentals. Consumers spending in Singapore has risen by 9.4 points to 65.3 points, according to the inaugural MasterCard Worldwide Index of Consumer Spending Capability (MWICSC), released on Monday.

On purchasing priorities, the survey shows that consumers in Singapore (70 percent) continue to want to wine and dine in the next six months, followed by consumer electronics (52 percent) and Fashion and Accessories (48 percent) which ties with travel in third place. This mirrors findings from the previous surveys.

A majority (60 percent) of consumers in Singapore also plan to maintain their discretionary spending at the same level as six months ago, while 16 percent plan to spend more. Compared to the last survey, fewer Singaporeans are planning to cut back on their discretionary spending (24 percent against 30 percent in the last survey).

“This is an encouraging boost in confidence,” said MasterCard, compared to 2009 when the index contracted by 7.7 points and the economy saw a correlated 7.8 percent contraction in retail sales.

“With strong consumer confidence and MWICSC growth observed this year, it is expected that retail sales in Singapore will also grow in the double digits,” it added.

The new Index has been developed to provide insights into consumer spending over a period of a year. It builds on the understanding gained from the MasterCard Worldwide Index of Consumer Confidence.

All 14 markets in this year's survey show positive year-on-year changes compared with 2009, indicating rising consumer spending capability moving forward.

Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide said: “The new MasterCard Index of Consumer Spending Capability shows that consumers across Asia/Pacific are in a much stronger position to spend more in 2010 compared with last year, as well as against the benchmark of their levels of spending in the past ten years.

“In markets like Indonesia, Hong Kong, Singapore, India, and Malaysia, the increase in their spending capability this year is expected to be particularly strong. The timing of this rise in MWICSC is especially important as governments everywhere are exiting their aggressive fiscal spending programs introduced last year.

“A rise in MWICSC in Asia/Pacific therefore means households are in a position to take up the slack left behind by the withdrawal of government spending to keep domestic demand growing, which will in turn enable the region to better withstand continued market volatility and uncertainty that is likely to persist through much of this year.”

The latest survey on consumer purchasing priorities was conducted from March 15 March to April 12 and involved 10,503 consumers from 24 markets. A total of 403 consumers were surveyed from Singapore.