Consumers to Maintain Discretionary Spending Levels Going into 2010: MasterCard Survey

Dining and Entertainment Remains Top Spending Priority in Asia/Pacific and Middle East; Home Purchase/Renovation is Top for Africa Respondents

Consumers are expecting to maintain their spend on discretionary items such as dining out, trips abroad and consumer electronics for the next six months, according to the latest MasterCard Worldwide Survey of Consumer Purchasing Priorities released today. Across Asia/Pacific and the Middle East, consumers’ top discretionary spending priority for the six months ahead remains dining and entertainment, while respondents in Africa are putting home purchase or renovation top of their list.

It appears that many love to wine, dine and enjoy themselves - dining and entertainment ranks among the top three spending priorities across 22 of the 24 markets surveyed in Asia/Pacific, Middle East and Africa. The category was No.1 for consumers in Australia, China, Egypt, Hong Kong, India, Japan, Korea, Malaysia, Morocco, New Zealand, Saudi Arabia, Singapore, Taiwan, Thailand, the UAE and Vietnam.

Home is where the heart – and discretionary spend – is. Buying or renovating one’s home as a category ranks top three in consumer priority in nine of the markets – Egypt, India, Indonesia, Kenya, Morocco, Nigeria, Qatar, South Africa and the UAE.

The MasterCard Survey of Consumer Purchasing Priorities is released twice yearly and provides valuable insights into consumers’ discretionary spending priorities for the six months ahead in 10 main categories. The latest survey was conducted from 1 October to 9 November 2009 and involved 10,623 consumers from across Asia/Pacific, Middle East and Africa. Three new African markets were added to this survey - Kenya, Morocco and Nigeria - bringing the total number of markets surveyed to 24. Data collection was via personal, online, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.

Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide said, “While dining and entertainment remains the top spending priority, it is interesting to see that more consumers are looking to upgrade or renovate their homes as the economy picks up. This is especially true among consumers in the Middle East and Africa. Higher consumer spending on home renovations and improvement in turn reflects more buoyant conditions in the property markets. These categories of expenditure also prove to be resilient in the face of any potential cutbacks in spend. The latest findings are positive for a stronger outlook of domestic consumption in 2010, and barring any unexpected shocks to the economy, we expect private consumption to continue to grow.”

The survey data also provides information on how resilient each of the ten categories is to cutbacks in planned expenditure. The more resilient a category is, the lesser it is prone to cutbacks. The data is used to derive the MasterCard Worldwide Index of Consumer Purchasing Resilience.

Among the ten main discretionary spend categories, the most resilient appears to be private tuition and extracurricular activities for one’s children across consumers in the Middle East and Africa. In contrast, consumers across Asia/Pacific have said that they expect to cut back least on fitness and wellness.

While spend on private tuition and extracurricular activities for one’s children may not rank among the top three categories of spend for consumers in many of the markets surveyed over the next six months, it is the category least prone to cutbacks. As with the previous Index released six months ago, this category has the highest Resilience score (88) across the Asia/Pacific, Middle East and Africa region. At an individual market level, it is the most resilient category in nine markets - Egypt, Hong Kong, Indonesia, Kuwait, Lebanon, Malaysia, Nigeria, Thailand, and Vietnam. In China and India, dining and entertainment is the most resilient category, with Index scores 72 and 87 respectively.

The following data from the survey is used for the Index: the categories of goods and services that consumers plan to spend on in the coming six months, how important each of these categories is to them and if they are expecting to cut back on their discretionary spending over the next six months in these categories from the six month period prior. The Index and its accompanying reports do not represent MasterCard financial performance.

Market highlights from the MasterCard Worldwide Survey of Consumer Purchasing Priorities and the MasterCard Worldwide Index of Consumer Purchasing Resilience include:

Asia/Pacific

Consumer Purchasing Priorities for the Next Six Months

• A majority of consumers in 10 of the 14 Asia/Pacific markets plan to maintain their level of discretionary spend for the next six months, keeping it at similar levels to six months ago. Only four markets (Indonesia, Malaysia, the Philippines and Thailand) show a majority of consumers looking to decrease their discretionary spending compared to six months ago.

• Similar to the previous survey released in July ‘09, dining and entertainment (62%) as well as fashion and accessories (44%) remain the top two spending priorities across Asia/Pacific for the next six months. Fitness and wellness has however slipped a notch, with consumer electronics purchases (38%) now in third place.

• Dining and entertainment ranks among the top two spending priorities across all 14 markets surveyed in Asia/Pacific and took top spot in 12 of the markets – Australia (61%), China (54%), Hong Kong (73%), India (55%), Japan (69%), Korea (75%), Malaysia (55%), New Zealand (59%), Singapore (72%), Taiwan (69%), Thailand (66%) and Vietnam (90%) .

• Fashion and accessories ranks among the top three spending priorities for the next six months in 10 of the markets – Australia (48%), China (48%), Japan (50%), Korea (57%), New Zealand (47%), Philippines (55%), Singapore (48%), Taiwan (47%), Thailand (37%) and Vietnam (80%).

• More consumers in the region (38% vs. 30% six months ago) are looking to spend on consumer electronics. This category is among the top three spending priorities for consumers in eight markets – Australia (36%), China (43%), Hong Kong (54%), Japan (43%), Korea (49%), New Zealand (36%), Singapore (53%) and Taiwan (54%).

• In terms of some of the other key categories:

O Buying or updating/renovating one’s home is a priority for consumers in India (ranking as the second most important priority at 33%) and Indonesia (ranking as the third most important priority at 28%).

O International air travel (59%) ranks second as a spending priority for consumers in Hong Kong.

O Providing their children with private tuition and extra curriculum activities is important for consumers in India (29%), Indonesia (34%), Malaysia (46%) and Thailand (39%), with the category ranking among their top three spending priorities.

• Compared with six months ago, more consumers (54% vs. 31% six months ago) across the region have shopped online for discretionary items such as holidays, entertainment and luxury goods.

MasterCard Worldwide Index of Consumer Purchasing Resilience

• Spending on fitness and wellness is the most resilient across Asia/Pacific, with an Index score of 76. This is followed by spending on dining and entertainment (Index score: 66) and fashion and accessories (Index score: 62).

Middle East and Levant (MEL)

Consumer Purchasing Priorities for the Next Six Months

• A majority of consumers in all six markets in the Middle East plan to maintain their level of discretionary spend for the next six months, keeping it at similar levels to six months ago.

• Similar to the previous survey released in July 2009, dining and entertainment (52%) as well as fashion and accessories (47%) remain the top two spending priorities across MEL for the next six months. The purchase of consumer electronics has however slipped two notches, with buying or upgrading/renovating one’s home (38%) now in third place.

• Dining and entertainment as well as fashion and accessories rank among the top three spending priorities across all markets in the Middle East.

O Dining and entertainment took top spot in Egypt (86%), Saudi Arabia (54%) and the UAE (46%) while fashion and accessories was the top priority for consumers in Kuwait (61%) and Lebanon (54%).

• Buying or updating/renovating one’s home is among the top three priorities for consumers in Egypt (45%), Qatar (52%) and the UAE (37%).

• Providing their children with private tuition and extracurricular activities is important for consumers in Kuwait (46%) and Lebanon (35%), with the category ranking among the top three priorities.

• Shopping in the stores continue to be more popular with consumers in the Middle East, with 83% of consumers stating that they do not shop online at all for their discretionary spend items.

MasterCard Worldwide Index of Consumer Purchasing Resilience

• Private tuition and extracurricular activities for one’s children is the most resilient discretionary spend category in the Middle East, with an Index score of 92. This is followed by buying or updating/renovating one’s home (Index score: 87) and fashion and accessories (Index score: 83)

Africa

Consumer Purchasing Priorities for the Next Six Months

• Among all the markets surveyed across the Asia/Pacific, Middle East and Africa, Nigeria is the only market with a majority of consumers (55%) looking to increase their discretionary spend in the next six months.

• In terms of the other African markets, the majority of consumers in South Africa and Morocco are looking at maintaining their discretionary spend for the next six months compared to the six months preceding, while the majority of consumers in Kenya are looking to decrease spend.

• Buying or updating/renovating one’s home (40%), fashion and accessories (35%) and dining and entertainment (32%) are the top three spending priorities across Africa for the next six months.

• Buying or updating/renovating one’s home is among the top three priorities for all four African markets surveyed –Kenya (44%), Nigeria (46%), Morocco (45%) and South Africa (24%).

• Each of the four African markets has a different top spending priority – South Africa (fashion and accessories), Morocco (dining and entertainment), Kenya (private tuition and extra curriculum activities for one’s children) and Nigeria (buying or updating/renovating one’s home)

• Shopping in the stores continue to be more popular with consumers in Africa, with 82% stating that they will not be shopping online at all for their discretionary items.