19 July 2004, 09:25  Japanese consumer confidence is turning round, MasterCard

Consumer confidence in Japan is poised for recovery, according to a new survey which shows sentiment among Japanese at a 12-year high on signs of an improving economy and falling unemployment. Across the rest of Asia, consumer sentiment was robust but not quite as strong as six months ago, according to the latest MasterCard survey. Recent volatility in stock markets have made consumers in countries like China, Hong Kong, Taiwan and Malaysia more cautious. Japan was the star performer of the survey, MasterCard said, because consumers, who had been consistently pessimistic since the survey began 12 years ago, had turned neutral. "That's really encouraging," Yuwa Hedrick-Wong, economic adviser to MasterCard Asia-Pacific, said on Monday. "Consumption is really turning around." Unemployment in Japan is at a four-year low and the country is beginning to see the long-term benefits of the shift of Japanese companies' production to China. "New jobs are being created faster than jobs are being lost in Japan, even in manufacturing. That began last year," said Hedrick-Wong. "The most successful companies are moving to China and the irony is they are doing so well in China they are stimulating upstream activity such as research and development in Japan and that is booming." Japanese consumers were benefiting, because goods made in China were much more affordable than those in Japan, he said.
Japan registered a score of 47.6 in MasterCard's latest MasterIndex of consumer confidence, below a regionwide average score of 62.3 but sharply higher than Japan's reading of 31.8 in a similar survey six months ago. The survey polls more than five thousand consumers in 13 countries in the Asia-Pacific. Vietnam came out tops with a score of 91.6, followed by Malaysia and China. However, Malaysia's reading of 84 was down from 93.5 in the previous survey while China's score fell to 78.9 from 83.7. Consumer confidence was weakest in South Korea, which had a score of 40.7, down slightly from the previous survey. But Hedrick-Wong expects that to change in coming months. "We are seeing the last stage of the clean-up of the burst of the consumer debt bubble," he said. "Household debt as a percentage of disposable income has declined for the first time in three-and-a-half years and although household debt is still growing it is growing by four percent as opposed to 25 percent." The economic environment in South Korea was supported by an external sector that was likely to remain strong, he said. "By the end of the year the deleveraging of consumer sentiment will be completed and we'll see an expansion (of consumption) next year."///

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