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Asian consumers have remained resilient even as they expect an impending hit to their personal finances owing to the Covid-19 outbreak, according to a March survey by McKinsey & Co.
The survey, titled “Survey: Asian consumer sentiment during the Covid-19 crisis”, polled consumers in China, India, Indonesia, Japan and South Korea. It is the second similar survey for China (the first was conducted in February), while it is the first for the other four countries. Sample sizes varied from 582 people in India to more than 1,000 in China.
The survey notes that consumers from these markets demonstrate varying degrees of confidence in the prospects for economic recovery, with those in the earlier or later stages of the outbreak being significantly more optimistic.
“These sentiments are likely influenced both by their awareness of the disease and recently announced government contingency measures such as movement restrictions and business rescue plans as well as other news events,” the survey explains.
“In China, consumer confidence has stabilised, with optimism that the economy will rebound in two to three months rising to 47% of respondents in late March (from 43% the previous month).”
The report adds that most consumers expect their routines and personal/household finances to be impacted over the next two to six months, except for Japanese consumers. A significant number of Japanese consumers expect the impact to last for more than seven months.
Nevertheless, consumers in all surveyed markets say they expect both their income and savings to decrease, regardless of their expectations for economic recovery. Korean consumers were the most pessimistic group about the prospects for their income (51%), while Indonesian consumers led in terms of expectations for decreased savings (54%).
Meanwhile, fears over economic stability and not knowing how long the crisis will last feature more prominently in Japan, South Korea and China. The safety of family and overall public health are primary concerns for consumers in India and Indonesia.
“Consequently, most consumers are doubling down on essentials such as groceries, household supplies and in-home entertainment, while spending on other categories like eating out and consumer electronics are likely to be significantly decreased in the next two weeks,” the survey says.
“In South Korea, the net intent to avoid quick-service restaurants is as high as 74%, compared with 22% in China. For consumer electronics, the net intent to reduce spend is 40% to 60% in all markets apart from China (8%).”
McKinsey & Co expects consumer mindsets to continue to shift as governments and central banks introduce unprecedented countermeasures and stimulus packages to mitigate potential impacts.