MasterIndex: Kiwi Consumer Confidence on Increase

Latest MasterIndexTM Reveals Kiwi Consumer Confidence on the Increase

New Zealand Consumer Confidence Strong Despite Multiple Interest Rate Rises and Increasing Property Prices

Auckland, 2 February 2007 – Despite Australia often being labelled ‘the lucky country’, it seems Kiwis no longer feel the grass is greener on the other side of the Tasman, according to the latest MasterIndex of Consumer Confidence, released today by MasterCard Worldwide.

The six-monthly index reveals that while Australians’ consumer confidence is in decline and their outlook on their quality of life remains pessimistic (falling from 39.5 to 25.5 according to the index) this is in stark contrast to New Zealand where the quality of life score is 53.6, up ten points since six months ago.

While the last six months have been punctuated by rising interest rates and residential property prices as well as weak economic growth, New Zealanders are optimistic about what the next six months hold. The New Zealand MasterIndex score is 61.0, compared to six months ago (45.2) and a year ago (42.5). Australia’s overall score of 45.3 declined from six months ago (46.5) and a year ago (49.8).

The MasterCard index analyses prevailing consumer perceptions of economic conditions for the six-month period ahead and has been conducted across the Asia/Pacific region for 14 years.

New Zealanders’ return to cautious optimism is signalled by improved scores in four of the five economic factors measured by the index. Kiwis are feeling significantly more confident about the economy (51.0 vs. 25.2 six months ago), the stock market at 55.2 (vs. 28.7 six months ago), and employment which measured at 61.0 compared to 42.7 six months ago. Their outlook on regular income deceased only slightly - 84.3, a decrease from 85.8 six months ago but still ten points ahead of Australia’s score.

The Asia/Pacific region as a whole has a consumer confidence index of 64.3, rising from six months ago (57.4) and a year ago (57.7), and it is also above the Historical Average (59.5).

From a regional point of view, factors likely to have contributed to an improved consumer sentiment include the decline in crude oil prices and strong performance of the stock markets. Country-specific factors include the election of a new prime minister in Japan and its highly positive Tankan reports on business confidence and the ousting of the former prime minister in Thailand.

Notably, ten of the 13 Asia/Pacific markets have seen an improvement in their consumer confidence levels from six months ago. Vietnam continues to be the most optimistic market (93.7), followed by Hong Kong (88.8), Singapore (82.5) and China (81.2).

This positive outlook of consumer confidence for the first half of 2007, however, has to be viewed in the context of a widely expected slowdown in growth in the US, and possibly China, two key drivers of exports for Asia.

“Many markets across Asia/Pacific are still heavily dependent on exports. Net exports have contributed more than domestic demand to economic growth in recent years in most Asian markets. There is a need to build a more robust domestic sector. Consumer sentiment is fairly optimistic in 1H 2007 but things might change quickly in the second half of the year if growth slows sharply in the US, leading to a decline in export demand for Asia” said Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide.

The latest MasterIndex survey, the region’s most comprehensive and longest running consumer confidence survey, was conducted from 11 October to 30 October 2006 and involved 5,405 consumers across 13 key Asia/Pacific markets. In its fourteenth year, the bi-annual survey analyzes prevailing consumer perceptions of economic conditions for the six-month period ahead. The scores ranging between 0 and 100 are based on responses on five variables: Employment, Economy, Regular Income, Stock Market and Quality of Life.

ENDS

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