Taiwan Returns Somber Consumer Confidence Indices in Asia Pacific

Despite the nerve-rattling volatility in global financial markets over the past year, most countries in the Asia Pacific still feel optimistic about the economic climate for 2008. MasterCard International recently conducted a survey of 13 economies in the area, which showed that consumers in most countries in the Asia Pacific foresee improving economic climate in 2008 or Chinese Year of the Rat, except two nations with one being Taiwan.

Of the 13 nations polled, 10 show rising consumer confidence index (CCI) and expect to see upward trends in economy, stock market, income from regular employment, and living standard for the first half of 2008. Battered by seemingly frequent but often locally highly-publicized political dissent, disruptions and confusion, consumers in Taiwan have been surveyed to foresee a gloomy future-with the island therefore recording the lowest CCI of 29.7 points among the Asia Pacific economies. Such outlook makes the country the most pessimistic among its neighbors for the second consecutive year.

MasterCard points out that most Asia Pacific consumers, though not yet having lost faith in their countries' economic might, have been victimized by the aftermath of several global events, including soaring international oil prices due to the Iraq war and the U.S. sub-prime mortgage storm that rocked global financial markets, which may lead to inflation.

Being often touted recently as the next unexplored, potential-filled Asian emerging economy, Vietnam unsurprisingly registered, among the 13 nations surveyed, the highest score of 94.3 points in the MasterIndex of Consumer Confidence (MCC), which ranges from 0 to 100 points, with Taiwan posting the lowest at 29.7 points. Hong Kong came in second position with a score of 85.9 points, closely followed by China and Singapore, which posted 85.5 and 83.6 points, respectively.

South Korea registered the largest rise of 15.6 points to 64.1 points in the MCC, with Thailand, another reportedly robust performer in terms of domestic stock value, seeing the index grow to 44.2 points from 36.7 points; while Japan posted a sharp fall of 18.2 points to 48.6 points from 66.8 points.

Rising Global Importance

A MasterCard senior manager says that leading economic powers in the Asia Pacific are playing ever bigger, vital roles in the international market, particularly the "sleeping giant" China that has been awakened over the past two decades. China has not only become an enormous manufacturing base for advanced nations but also, with its astronomical consumer population that is becoming increasingly affluent and demanding, a big buyer of exports of all kinds from both developing nations and advanced ones. A recent news report says that China is replacing the U.S. as the major buyer of exports from Taiwan and Hong Kong.

Another survey by ACNielsen, the world's leading pollster, shows that Taiwan's consumer confidence index (CCI) gained 69 points, ranking fourth from the bottom globally. Some 47% of the polled consumers in Taiwan foresee a decline in the island's economy in 2008 and about 75% fret over their own financial wellbeing for the next six months, a proportion believed to be the highest of its kind worldwide. On the contrary but again unsurprisingly, some 69% of those polled in China believe that the continent is poised to see even livelier economic activities in 2008, the highest in the world. Such optimism may be buoyed by the upcoming Beijing Summer Olympic Games and the fact that the Shanghai stock index has, in 2007, delivered awe-inspiring performance.

Unable to block from consciousness the harsh reality of continually rising global crude prices, record-setting gold prices and the trickling effect of the U.S. sub-prime mortgage debacle, a quarter of those polled worldwide predict a slowdown in the global economy for 2008, with those in Taiwan posting a corresponding percentage of 47%, only lower than the 51% registered by the Thais. The rosy outlook of the mainland Chinese and Vietnamese carry through, with 70% of those surveyed in the former predicting improving economy for the year, the world's highest, and those surveyed in Vietnam following at 66%.

In terms of CCI compiled by ACNielsen, South Korea gained the lowest score of 54 points, and Portugal posted the second lowest at 56 points, and Japan the third lowest at 59 points. Taiwan and Hungary both recorded the world's fourth lowest at 69 points. Taiwan has seen its CCI on a pessimistic slide-registering 83 points in 2005 but only 69 for 2008.

Optimism Abounds in Asia

Some of the nations surveyed by ACNielsen with the highest or rosiest outlooks are in Asia, with Indonesia, Australia, Hong Kong, Vietnam, New Zealand, and Singapore returning results among the top-10 worldwide. Again the people surveyed in Taiwan seem to see dark skies ahead-some 75% are anxious about their financial wellbeing over the next six months, jumping by 11 percentage points from the corresponding figure recorded in the last survey conducted about six months earlier; and more than 30% worry about health, political and unemployment issues in the coming six months.

The ACNielsen poll shows that some 13% surveyed globally say that they have no money left after meeting daily expenses, with about two-thirds believing that now is not the right time to purchase products high on their list of desirable-objects. ACNielsen conducted the survey in November 2007 on 48 countries and regions worldwide by polling online a total of 26,312 consumers.

ADB Also Sees Slowdown

In addition, a forecast recently released by the Asian Development Bank (ADB) shows that there will be a slowdown in economic growth of the major economic powers in East and Southeast Asia, excluding Japan, due to the impact from global financial volatility, soaring oil prices and commodities, and predicted recession in the U.S. economy.

Nevertheless, ADB has been adjusting upwardly its forecast on Taiwan's economic growth for 2007 and 2008. In the beginning of 2007, ADB predicted that Taiwan's economic growth would remain at 4.3% for 2007 and 4.5% for 2008. In September 2007, ADB raised such percentage for 2007 to 4.5%; and in December further adjusted the percentage to 5% for 2007 and 4.8% for 2008.

ADB also has raised its 2008 economic forecast for Malaysia, the Philippines and Singapore, with Indonesia, Vietnam, Hong Kong and South Korea seeing their forecasts unchanged for 2008, and Thailand and China to see reduced forecast for economic growth.

MasterIndex of Consumer Confidence Survey for 2008 (Unit: points)
Rank	Nation	Score	Score in last survey
1	Vietnam	94.3	91.3
2	Hong Kong	85.9	84.7
3	China	85.5	84.0
13	Taiwan	29.7	35.6

Source: MasterCard International

ADB Forecast of Economic Growth for 2007 & 2008 (Unit: %)
Country	2007	2008
Indonesia	6.2	6.4
Malaysia	5.9	5.9
Philippines	7.0	6.4
Thailand	4.3	4.8
Vietnam	8.3	8.5
9 ASEAN Members	6.3	6.1
Hong Kong	6.1	5.4
S. Korea	4.8	5.0
Singapore	8.1	6.3
Taiwan	5.0	4.8
China	11.4	10.5
East & Southeast Asia, excluding Japan	8.5	8.0
Japan	1.9	1.7
U.S.	2.2	1.9

Source: Asian Development Bank