consumer confidence here hits 2-year low

in the recently released nielsen global consumer confidence index for singapore, it showed a drop to 94 points in the 3 months to september compared to the earlier quarter. this figure is even lower than the previous low of 96 in the 3rd quarter of 2009.

a number above 100 indicates positive consumer sentiment, while a figure below 100 indicates the opposite which is pessimism.

this survey is part of the nielsen global online survey which polled more than 28,000 consumers in 56 countries throughout the asia-pacific, europe, latin america, the middle east, africa and north america.

the top 3 concerns:

a. the economy (27%)
b. job security (20%) and
c. the increasing food prices (10%).

generally, approx 67% have indicated they plan to put spare cash into savings and 31% of consumers plan to invest in stocks and mutual funds which is much higher than the global average of 18%.

ms grace liu, head of consumer research at nielsen singapore said this is a signal for an appetite for wealth management products and services.

my comments:

this survey's findings is in-line with our government's warning that our country will see slower economic growth in the future as in our prime minister lee hsien loong's recent speech in parliament;

"Over the next 10 years, we've set a target of 3%-5% [annual economic growth], but I would say if we can make three-plus percent consistently over the next 10 years we've had a good decade."

mr lee added:

"singapore faces a "real risk of a protracted global slowdown" as the U.S. and Europe struggle with "deep and structural problems."

i'm not an economist but my understanding is that slower economic growth is usually preceded by lower demand for goods and services which will translate to more people receiving the pink slip.

although 65% of respondents here said this is not a good time to buy things that they want or need, i see a contrarian picture in terms of the data from 2 most prized items like housing and automobiles.

despite our government's property cooling measures, property prices here continue to head north and for automobiles, the high price of a COE has not curbed the appetite to own one (or more) which explains why the average loan for a car has now reached $85,105.

as these are big-ticket items, and the financial commitment to repay the loans are longer term in nature, i wonder whether these buyers have done their 'homework' before signing on the dotted line.

with the current interest rate environment at all time lows, and any future increase in interest rates will certainly tip the scales in terms of the affordability in the repayment of loans.

and taking up car ownership come with high costs, both for the usage and maintainence of the vehicle and because car loans fall into my bad debt category, i have always adviced young people and couples to forgo car ownership.

ms grace liu said the survey provided significant opportunites for financial service providers in our country and i agree but my hope is that our consumers will place wealth protection planning at the top of their priority list because when it comes to the crunch, there is no turning the clock back.