Consumer Confidence - Has Asia's Economic Sprint Resumed?

There has been much talk of the economic upheaval of the last year as a ‘global’ crisis. And with emergency meetings of the G20 called to address a critical loss of confidence in the banking sector as well as global capital flows still a fraction of what they were, that has seemed like a fair assessment. But perhaps we need to reconsider that ‘global’ tag.

In much of Asia, the recession is looking more and more like a short pause for breath in an economic sprint that’s still ongoing. China’s Statistics Bureau announced at the end of last week that the country’s GDP in the third quarter of 2009 was 8.9% up on the same period last year. Indonesia’s economy is expected to grow at 4% this year – not at all shabby. Compare this to economies in North America and Europe, where if things look a little less bleak than they once did, the return to economic growth is slow and shaky, and a lapse back into recession well within the bounds of possibility. And in some major economies - notably here in the UK, where figures last week showed the economy continuing to contract in the third quarter, it’s far from clear that the recovery has got going at all.

This picture is amply borne out by our International Consumer Sentiment Index - the first in what we hope will be an annual study of consumer confidence across the world. We’ve taken the same approach that academics at the University of Michigan have adopted in monitoring US consumer confidence for more than fifty years, asking people across 22 countries to assess how their finances compare to this time last year, how they expect them to change in the next year, what they think will happen to their country’s economy over the next year and the next five years, and whether they think now is a good time to make major household purchases.

Chinese consumers emerge as the most confident by a long way, with an index score of 113.5, with Indonesians second, recording a score of 100.6. Americans were at only 71.9, and the terminally gloomy Japanese at only 45.1. To put it in some historical context, the highest level of US consumer confidence recorded over recent years was at the height of the dotcom bubble in February 2000, when 111.3 was recorded, while the lowest was in May 1980 as the energy crisis and impending recession started to bite. With two-thirds of Chinese expecting to be richer in a year’s time, perhaps it’s no surprise their economy is booming again – as we know, confidence is central to any economic recovery. And maybe the much-anticipated changing of the economic guard, with the US giving way to China as the motor of growth, is starting to happen sooner than we thought?

Weapons of Mass Delusion

GlobeScan is in the business of measuring perceptions, not facts. This is something I frequently find myself reminding clients when presenting research findings that sometimes show that their stakeholders or consumers have a much hazier - or just plain wrong - sense of what their organisation is doing than they might like. Unless you've invested almost as much time, energy and thought in understanding your stakeholders' perceptions and communicating to them what you're doing as you have in actually doing it, don't expect to be given the credit.

That said, while they can be serious and expensive, misperceptions are rarely a matter of life and death for our clients. The same could not be said of the various misperceptions that led up to the second Gulf War in 2003 - the most glaring one being that Saddam Hussein possessed the infamous 'weapons of mass destruction'. I was interested to read in last week's Washington Post that Saddam told the FBI that he allowed the myth to be perpetuated largely because he was worried about appearing weak to the 'fanatic' (as opposed, presumably, to just regularly psychopathic) Iranian leaders - and would in fact have been open to a 'security agreement' with the USA to protect Iraq from a potential Iranian attack.

Given the human, political and economic consequences of the decision to invade, this could be one of the costliest perception misreadings of all time. At the very least, it's a reminder to the rest of us take some time to make sure we really understand what other interested parties are thinking before embarking on our own risky projects.