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.

Strong Copenhagen Agreement Unlikely, Despite Potential Benefits: Sustainability Experts Speak

The latest findings from our regular poll of sustainability experts around the world from the worlds of business, academia and NGOs illustrates the ambivalence that many of those in the know are feeling as the Copenhagen summit approaches.

On the one hand, they are exceptionally downbeat about the prospects for a meaningful agreement being concluded at Copenhagen - that is, one stringent enough to avert the major and frightening consequences for the climate that most scientists now predict. More than eight out of ten anticipate that, while a total failure to reach agreement is unlikely, the compromise that emerges won't be tough enough to make much of a difference.

But on the other, they see real prospects for a wave of innovation and investment in renewable energy, and low carbon products and services if a really radical agreement is reached. This is important, as it seems to suggest that experts largely don't subscribe to the view that the dynamic between the environment and the economy is a zero-sum game - that is to say, the more you try and fix one, the more you damage the other. With Hu Jintao committing China last week to producing 15% of its power from renewables and nuclear energy by 2020, this is clearly the way the tide is shifting.

Whether it will shift fast enough to avoid us all being engulfed, in the absence of a more ambitious agreement in Denmark in December than currently looks likely, is quite another matter.

The Global Economy: One Year On, Businesses Take Stock

McKinsey's latest Global Economic Conditions Survey makes for fascinating reading. Based on responses from 1,677 company executives from across the world, it confirms the widespread sentiment that, one year on from the meltdown, things are starting to look up - or at least, to appear a little less grim than they did in January. It's worth setting some of the views of company executives alongside those from our global general public polling on the issue that we reported last week. There's a lot of

As we noted, the huge increase in government action to stimulate the global economy appears to have majority support among the general public in many countries around the world. Business executives, perhaps not surprisingly, are more equivocal, with 54% feeling that government should scale back - but not stop - their support for economies. But both seem to agree that government support is essential in the short term if a slide back into crisis is to be averted.

However, both consumers and business share a sense that the high noon of global capitalism may have passed - while the proportion expecting to see greater financial market integration is higher than it was earlier in the year and most expect globalisation to resume, on none of the measures of increased globalisation (more international trade, greater movement of labour across borders etc) do a majority expect to see increased activity over the next five years. Meanwhile, our latest findings show that support for free market economics as the best available system continues to drift down, and now has the backing of only a little more than one in two (55%).

The Chinese results are some of the most striking. Our survey found that the Chinese public was particularly positive, and supportive of what their government had been doing to combat the crisis, and this confidence is reflected in an upbeat assessment by Chinese executives about their economy's prospects, with nearly one in three (30%) expecting Chinese GDP to regain pre-crisis levels by 2010. If they're right, perhaps the much-heralded changing of the guard, with US global economic dominance giving way to a world where the Chinese economy rules the roost, is about to happen sooner than we all thought.

Amid The Confusion, A Growing Carbon Consensus

Interpreting public attitudes on climate change is a confusing business these days - apparent contradictions abound, and the contrast between what people appear to believe, and how they behave, is often stark.

Polls like The Guardian's latest illustrate this well. The prevailing attitude of the UK public might be summed up as: yes, climate change is a major threat, yes, I should be doing more about it than I am, but whatever I do it probably won't make any difference - and anyway I'm not prepared to contemplate anything that will cause me financial pain. It's hardly surprising if policymakers seem paralysed by the political consequences of taking major steps to address the problem.

But look a little harder, and a consensus does start to emerge. Our latest global polling on the issue is evidence of this. We interviewed a sample of 1,000 adults in each of 19 countries how they felt about government actions to address climate change, including investment in renewables. Would they be good for the economy, or hurt the economy? Nearly two thirds (62%) felt they would be good for the economy. But what if that isn't the case - what if the economy suffers as a result of a government push to address climate change? Another clear response - three in five (60%) say governments should do it anyway. Of course, the devil is still in the detail. What if the economic damage translates into major cuts in public services, or tax hikes for large swathes of the population as well as much higher energy costs? The public may not have fully come to terms with that.

But even so, the figures are striking. Look at the USA and China - over half (52%) of Americans say they support measures to address climate change that would hurt the economy, and in China, nearly nine in ten (89%) feel that way. There may be a long way to go politically, but surely this amounts to a mandate for boldness from the leaders of the planet's current and future CO2-emitters in chief.

A Boost for Big Government

It’s a year today since Lehman Brothers went bankrupt, and we’ve been busy over the summer gauging the effect of a year of market crunch - and government splurge - on global public opinion.

As billions of dollars of state spending has poured into national economies over the last year in a frantic attempt to shore up the financial system and stop recession turning into depression, it’s become increasingly apparent that reports of the death of government as a serious economic player - a fashionable idea in early 2007 - were, as they say, somewhat exaggerated. Big government is back.

The seeds of the financial meltdown were, no doubt, sown over many years. But it’s worth remembering that the situation deteriorated so rapidly last autumn that governments in the major economies by and large didn’t have the time to consult their electorates about the handbrake turn in macro-economic policy that they undertook at the end of last year. The rediscovery of big government has largely done so without the endorsement of voters.

So, what’s the belated verdict? Positive, it appears. Our latest global poll for BBC World Service shows that, by and large, citizens around the world approve of governments attempting to stimulate their national economy in response to the recession - majorities in 13 of the 20 countries we polled supported a significant increase in government spending. Fully two-thirds want to see an increase in government stimulation and oversight of their economy - including nearly half of Americans, who are usually among the most suspicious of government overreach. Supporting troubled industries is also popular; bailing out banks less so. And the unprecedented stimulus package at the heart of the US response seems to have won plaudits, with 46% approving of the US’s approach so far.

But what is also apparent is that while people seem to feel the stimulus was needed in response to the crisis, it won’t in itself be enough in the longer term. One of the most striking findings is the very strong support for government investments in renewable energy and green technology, backed by nearly three-quarters. People seem to be looking for a different model. And they continue to feel that the benefits and burdens of the boom years haven’t been shared fairly. The crisis may have passed, but this appears to be a reminder that big governments need to lead, as well as spend.

A New Economy? Looks Suspiciously Like The Old One

Is a 'new', more sustainable economic model in prospect as the world attempts to pull itself out of recession? That's the question we posed at the latest of our regular 'salon' discussion evenings last night. We had distinguished speakers from Philips (Josephine Green), the BBC (Andrew Walker) and Sally Jeanrenaud of the International Union for the Conservation of Nature, and a diverse audience drawn from across the corporate and NGO world.

The discussion was certainly fizzing with ideas, but on the whole, the consensus was pretty downbeat - no, a new economic model was not around the corner. Many seemed to feel that the impressive rhetoric of government leaders about committing large sums of money to a low-carbon and sustainable economy is very far from being realised. And as far as reforming the wild excesses of global capitalism was - one panellist commented that he fully expected to see the economic high-rollers back at the gambling tables of the world's financial markets within a couple of years - even if perhaps with not quite as many chips as they had before the crash.

A number of hypotheses were floated - was a testosterone-driven, 'fight or flight' mentality in the upper echelons of business, finance and government to blame for the crisis? Are we suffering from the dominance of an orthodoxy that believes that a boom will always follow a bust, no matter how severe? Or is the main problem a lack of effective structures for international policymaking, and a political short-termism that's hard-wired into most of our modern democracies? There was no shortage of diagnoses, but optimism that a cure could be found was lacking.

But if it is indeed to be back to business as usual - for now - it's in the teeth of mounting unhappiness from the global public. Our latest data shows that support for both globalisation and the free market economy continues to erode. But in the absence of a clearly articulated alternative model for organising the world, what chance is there of real reform taking place?

Those looking for a silver lining have to search hard. We did find that the proportions believing that their children and grandchildren will have a better quality of life has increased, just a little. But before things get better, our salon felt they might be about to get a whole lot worse...