Singapore (PRWEB) February 08, 2013
Consumers in Singapore are likely to cut back on their spending over the next 12 months following a decline in consumer confidence in Q4 2012, according to a recent report released by global market research firm Nielsen.
Entitled “Nielsen Global Survey of Consumer Confidence and Spending Intention”, the report revealed that a total of 64% of consumers have expressed a desire to reduce their spending, up 3 points from the preceding quarter. Congruently, Singapore’s consumer confidence index has dropped by 3 points to 95 points in Q4 2012, after a brief uptick in Q3 2012.
Moreover, the research showed lower spending intentions across multiple discretionary areas, including taking holidays, buying clothes, and making investments. The largest decline was recorded for investments in stocks and mutual funds, which went down 8 points to 24%. Investments in savings funds also dropped 6 points to 58%; whereas retirement investments fell 4 points to 20%.
Correspondingly, approximately 63% of consumers have changed their spending habits to cut back on household expenses in Q4 2012, compared to 62% in Q3 2012. The top expenditures that were reduced include: clothes (55%); groceries (43%); and utility consumption (47%).
The decline in consumer consumption expenditures can be attributed to cash problems, with a total of 10% of respondents indicating that they had less cash in Q4 2012, compared to only 7% in Q3 2012. In addition, more Singaporeans are concerned about job security. About one in five (or 20%) of respondents have expressed less optimism about their job prospects for the year.
Commenting on the report, Mr. James Nuben, Head of Taxation at Singapore company registration consultancy AsiaBiz Services, said, “The cautious sentiment currently pervading Singapore’s consumer market can be attributed to a number of factors. At the onset, we see inflation as the main culprit, but there are, of course, other forces at play. Business outlook remains a major concern, as well as the prolonged crisis in global markets.”
“In general, I see the decline in consumer spending as an adaptive response to economic uncertainty. Consumer sentiments have proven to be a significant indicator of the health of an economy. In the most basic sense, when consumers view the economy as weak, they are more reluctant to spend and more keen to hold on to their money. This is particularly true in Singapore,” he added.
“The challenge for firms, therefore, is to bolster their marketing efforts and offer more incentives to consumers to cope with this wave. To stimulate the economy, we need continued spending activity. But to increase spending, consumers need more stimuli, perhaps in the form of tax cuts or a lower price index, among others. As such, measures must be implemented not only to help households and Singapore companies cope with rising costs, but more importantly, to ensure stability and sustainability in our economy,” he said in conclusion.
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