Press Office

Back to Press Office

Australian Consumers Pessimistic About Employment, Economy, Stock Market and
Quality of Life; Optimistic About Regular Income

Sydney, 7 July 2008 – Consumer confidence across Australia has continued to drop, according to the latest MasterCard Worldwide Index of Consumer Confidence released today.

Australians are feeling less confident about the next six months overall (42.8), compared to six months ago (64.9) and a year ago (68.3). Consumers are particularly feeling pessimistic about employment (39.8 vs. 55.5 six months ago vs. 63.7 a year ago), the economy (38.8 vs. 61.4 vs. 68.8), stock market (44.0 vs. 62.8 vs. 75.8) and quality of life (32.7 vs. 60.8 vs. 58.7).

The only exception is the optimism shown when it comes to having a regular income (58.9 vs. 83.7 vs. 74.5). Australians have displayed an optimistic outlook for regular income in the last 30 surveys. However, the current regular income index score, though optimistic, is the lowest ever since the inception of the Index in 1H 1993.

Across the Asia/Pacific region, consumers are only slightly optimistic about the second half of 2008, with the overall consumer confidence outlook (56.0) down from the level reported six months (69.3) and a year ago (67.9) respectively.

The decline in optimism can be attributed to the continuing global credit crunch and associated volatility in financial markets, rising inflation, mounting food and fuel prices, and slower economic growth in many of the markets surveyed.

“While financial institutions in Australia have been less affected by the implosion of structured finance, a rising regional challenge is accelerating inflation, which is much higher than that of the US and Europe,” observed Dr. Yuwa Hedrick-Wong, economic advisor to MasterCard Worldwide in Asia/Pacific.

This was also expressed at last week’s International Credit Card Summit hosted by MasterCard in Sydney, where representatives from across the industry pointed to the decline in consumer confidence as having the biggest impact on Australia’s economy.

“Accelerating inflation has also necessitated a tightening of monetary policy in many markets in Asia, and reduction of food and fuel subsidies in Indonesia, Malaysia, India and China; which contributed to both higher borrowing costs and lower consumer spending. So there are serious headwinds in the medium term with respect to consumer confidence in the region,” he said.

The six-monthly survey reveals that overall consumer confidence for the 13 markets¹ surveyed is down from the historical average (60.2) for the region, and ranks the ninth lowest in the 31 MasterCard Index surveys conducted since 1993.

The MasterCard Index measures consumer confidence on prevailing expectation in the market for the next six months. It is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. Five economic factors are measured: Employment, the Economy, Regular Income, Stock Market and Quality of Life.

Singapore (87.3) finds itself at the top of the Index, exhibiting very highly-sustained consumer optimism over both six months (83.6) and a year ago (83.3). With very favorable consumer sentiments on the five factors, Singapore consumers are currently and evidently very highly optimistic, surpassed only by their sentiments in 2H 1999. This strong optimism is also evident in four other markets including Hong Kong (83.1), China (82.7), Vietnam (86.2) and Taiwan (71.3).

On the other hand, six markets are currently as pessimistic or even marginally more so than they were during the last financial crisis between 1997-98. These are Korea (27.7 vs. 26.1 at crisis), Malaysia (36.9 vs. 40.9 at crisis), New Zealand (37.1 vs. 38.5 at crisis), Australia (42.8 vs. 43.0 at crisis), the Philippines (43.2 vs. 47.7 at crisis) and Thailand (23.7 vs. 25.6 at crisis).

The other two markets – Indonesia (36.7) and Japan (29.0) – while above their crisis average have low sentiments on the six months ahead.

The MasterCard Index is the region’s most comprehensive and longest running consumer confidence survey. The latest survey was conducted from 2 May to 26 May 2008 and involved 5,404 consumers across 13 key Asia/Pacific markets.

Other highlights of the latest MasterCard Worldwide Index of Consumer Confidence are:

• Taiwan (71.3) has come out from its three and a half years of consecutive pessimism, its optimism being driven by positive sentiments towards Employment, Economy, the Stock Market and Quality of Life. Taiwanese consumers remain cautiously optimistic about Regular Income.
• Thailand (23.7) is at the bottom of the Index and consumer confidence is at about the lowest level since they became part of the Index in 2H 1995, reminiscent of the last Asian financial crisis. Except for a neutral outlook for Regular Income, sentiments on the rest of the economic indicators are as low as at the height of the last financial crisis.
• Japan (29.0) has, for the first time since its recovery from a long period of generally deep pessimism, fallen back to being rather pessimistic. For four consecutive indices, from 2H 2005 to 1H 2007, Japanese consumers were optimistic for the first time in the history of the Index. Consumers are now particularly pessimistic about the Economy and Quality of Life for the next six months.

Australians unlike six months ago (64.9) and a year ago (68.3) have now turned pessimistic about the next six months, not just overall, but on Employment (39.8 vs. 55.5 six months ago vs. 63.7 a year ago), Economy (38.8 vs. 61.4 vs. 68.8), Stock Market (44.0 vs. 62.8 vs. 75.8) and Quality of Life (32.7 vs. 60.8 vs. 58.7). Australians are currently more pessimistic than they have been historically (56.8).

The only exception is, Australians are still a little optimistic on Regular Income (58.9 vs. 83.7 vs. 74.5) but then Australians have always shown an optimistic outlook for Regular Income in all the last 30 surveys. However, the current Regular Income Index score, though optimistic, is about the lowest ever achieved since the inception of the Index in 1H 1993.

Consumer confidence in China remains clearly very high and with the exception of Beijing, generally compares favorably with six months ago, a year ago as well as its historical average.

China as a whole, registers higher consumer sentiments on Employment (81.7 vs. 79.6 six-months ago vs. 75.3 a year ago), about the same very highly optimistic expectations of Regular Income (91.0 vs. 91.6 vs. 90.2) and a moderately positive outlook for the Stock Market (71.2 vs. 72.9 vs. 72.5) but shows a small pullback on Economy (84.4 vs. 90.7 vs. 92.0) and Quality of Life (85.3 vs. 92.8 vs. 90.1) even though consumer outlook for these two latter factors remains very positive nevertheless.

Beijing (77.9) sees a fairly significant decline in consumer sentiments on all five factors especially compared to six months ago. With the exception of Employment sentiments, expectations on all other factors are significantly below a year ago with Stock Market registering the biggest decline (58.9 vs. 75.4 vs. 72.0).

Shanghai (95.2) exhibits exuberance in this current Index with an above 90.0 Index score or very high optimism on all factors. Sentiments on Quality of Life (100.0), Economy (99.2), Employment (95.9) and Stock Market (91.0) are at record high.

Guangzhou (76.5) consumers continue to be fairly optimistic about the next six months as they had been six months ago (78.3), a year ago (74.5) and historically (74.6). They are however very highly optimistic about Regular Income (94.4 vs. 85.4 vs. 79.3) - more so than they had ever been. Their sentiments on Economy (71.9 vs. 82.6 vs. 79.3) and Quality of Life (72.6 vs. 90.5 vs. 77.9) on the other hand, are weaker than the past few years but still fairly optimistic.

Hong Kong consumers continue to be highly optimistic as they mostly had been over the last nine studies. The current Index score is not statistically very different from six months ago (85.9) and a year ago (84.7). It is however, well above the market’s historical average (56.6).

Sentiments on Employment (88.2 vs. 93.6 six months ago vs. 89.1 a year ago), Economy (88.9 vs. 91.2 vs. 91.1) and Regular Income (91.7 vs. 92.3 vs. 90.5) remain highly positive as in recent preceding periods.

Outlook for the Stock Market (71.2 vs. 69.3 vs. 70.6) remains fairly healthy. Quality of Life expectations (75.5) though healthy, has however come off from recent highs.

For the last three consecutive surveys, Indonesian consumers had been slightly optimistic about the next six months. However, in the current Index, consumers are not just significantly less optimistic than six months ago (57.8), a year ago (53.5), the six months prior to that (62.5) and its historical average (65.7); but are altogether rather pessimistic.

Sentiments on Economy (23.8 vs. 51.4 six months ago vs. 53.5 a year ago), Stock Market (38.6 vs. 58.4 vs. 56.9) and Quality of Life (17.3 vs. 52.0 vs. 32.8) have fallen off very sharply to rather or very pessimistic. Outlook for Employment has likewise declined sharply from being pessimistic six months ago (39.1) and a year ago (41.4), to even deeper pessimism (21.4). All the above have contributed to the significant fall in the current Index.

Expectations of Regular Income (82.4 vs. 88.0 vs. 82.8) however remain highly optimistic as it had been in all previous measurements, except at the peak of the last Asian economic crisis in 1H 1998. As a matter of fact, Regular Income sentiments in Indonesia had almost invariably outperformed the rest in good or bad times as it is the general practice of the government to increase wages yearly.

After staging a strong comeback from long and deep pessimism in 2H 2003, Japan’s score had improved from a mere 17.4 (in 1H 2003) to 45.4 (in 1H 2005), to four consecutive optimistic indices of above 60. Then, starting six months ago, Japanese consumer confidence wavered, suggesting a touch of pessimism. Now, the outlook for the next six months is rather pessimistic.

The current Index score is significantly below that of six months ago (48.6), a year ago (66.8) and marginally below the market’s historical average (31.5). Sentiments on Economy (24.4 vs. 50.4 six months ago vs. 73.1 a year ago), Stock Market (32.1 vs. 58.5 vs. 70.1), Employment (34.5 vs. 60.4 vs. 81.5) and Quality of Life (19.5 vs. 32.4 vs. 54.1) have severely tumbled.

Sentiments on Regular Income (34.5) may not have fallen by as much but they are significantly below six months ago (41.1), a year ago (55.4) and like the rest, are also below recent years.

Consumer confidence in this market has declined significantly from six months ago (64.1) and a year ago (48.5). It is now at a level which is lower than its historical average (51.7) and the majority of the market’s 30 previous measurements.

Consumers are not only far more pessimistic on all five factors than both six months and a year ago but current consumer sentiments on Employment (16.4), Economy (11.7) and Quality of Life (15.8) are deeply pessimistic. Those on Regular Income (45.9 vs. 73.7 six months ago vs. 58.6 a year ago) and Stock Market (48.7 vs. 66.6 vs. 70.2) are only slightly pessimistic but are much below both six months and a year ago.

Malaysia’s current Index score - supported by abnormally weak consumer sentiments on all five factors - is only about half of what it was six months ago (72.5) and a year ago (71.0) as well as the market’s historical average (72.8). Consumer sentiments in this market have not been as weak since 1H 1998 (23.8) and 2H 1997 (31.5) of the last Asian economic crisis. The current score is the third lowest in the 15 and a half-year history of the survey and a series of 31 measurements.

The current consumer confidence in this market may also be likened to 2H 2006 (37.5) except that consumer sentiments on Economy (33.6 vs. 39.2 at 2H 2006) and Quality of Life (31.2 vs. 39.8 at 2H 2006) are worse off currently even though expectations of Regular Income is a little stronger (39.5 vs. 31.9 at 2H 2006).

New Zealanders had been slightly optimistic consecutively in the last three measurements – including six months ago (56.3), a year ago (57.1) and six months prior to that (61.0).

However, consumer sentiments have now taken a significant downturn, going lower than its historical average (58.8). The current Index score is mirrored by equally pessimistic expectations of Employment (30.8 vs. 51.9 six months ago vs. 52.7 a year ago), Economy (30.1 vs. 53.4 vs. 48.3), Stock Market (31.5 vs. 56.5 vs. 61.3) and Quality of Life (33.8 vs. 39.5 vs. 43.1).

As in all previous measurements in good and bad times, consumers continue to be optimistic about Regular Income but its current Index score of 59.3 is the lowest seen in the past 29 readings since 2H 1993.

Consumer confidence in this market is significantly below what it was six months ago (67.7), a year ago (64.6) and its historical average (50.8). Since becoming optimistic in 1H 2006 after three preceding consecutive readings of pessimism, Filipino consumers have once again become pessimistic. Except for their continued optimism on Regular Income (78.4) which is evident in all previous measurements, consumer sentiments on all other factors are either very or rather pessimistic - Employment (28.7), Economy (35.5), Stock Market (38.1) and Quality of Life (35.4).

Singapore consumers continue to be very optimistic. The market’s Index score is higher than the last 15 readings including six months ago (83.6), a year ago (83.3) and the market’s historical average (67.0). In fact, consumer sentiments have not been as positive since 2H 1999 (92.7) and 1H 2000 (87.4).

Consumer sentiments on Economy (93.4), Employment (98.1) and Regular Income (85.9) maybe deemed highly optimistic while those on Stock Market (80.0) and Quality of Life (79.0) are very optimistic – all of which support the very high optimism in the market and the current near record high Index.

Taiwanese consumers had been very pessimistic in the last six surveys. However, consumers are now filled with positive expectations. This is evident in the current optimistic Index score versus a rather pessimistic score six months ago (29.7), a year ago (35.6) and a slightly pessimistic historical average (46.9).

Taiwanese consumers now show a fairly to rather optimistic outlook for Employment (75.0), Economy (79.8), Stock Market (81.1) and Quality of Life (67.3). They, however, do not appear as certain about Regular Income (53.6) though they seem very slightly or cautiously optimistic. For at least the past three years, consumers had been rather or even deeply pessimistic on these economic factors except for one or two instances where sentiments on the Stock Market managed to barely surface above an Index score of 50.0.

Thai consumer confidence over the last five surveys since 2H 2005, fluctuates greatly but is mostly pessimistic. The current Index score is no exception except that it indicates the weakest sentiments ever since 2H 2005. The current consumer sentiments may be reminiscent of the last Asian economic crisis evident in 1H 1998 (18.2), 2H 1997 (20.2) and 1H 1997 (25.3). Current consumer sentiments are clearly below that of six months ago (44.2), a year ago (36.7), the market historical average (55.2) and 23 of the 25 preceding Index scores. Sentiments on all except Regular Income (50.5) are extremely pessimistic including - Employment (22.2), Economy (16.2), Stock Market (17.2) and Quality of Life (12.6). Current sentiments on Regular Income - though barely optimistic or neutral - are at or very near a record low for the market.

As before, Vietnamese consumers are highly optimistic about the next six months. Like the last Index, they are very highly optimistic about Regular Income (97.0) and Employment (91.2) and although they are still highly optimistic on Economy (84.0 vs. 97.7 six months ago vs. 97.8 a year ago), and Quality of Life (86.0 vs. 95.8 vs. 96.5), they are not as profoundly optimistic as previously. Sentiments on Stock Market are positive (72.7), though lower than six months ago (87.0) and slightly stronger than a year ago (68.5); are weaker than most previous measurements.

Vietnam’s current Index score, although highly optimistic, has fallen off significantly from six months ago (94.3), a year ago (91.3), its historical average (91.9) and most preceding measurements. It is among the lowest achieved since the incorporation of Vietnam into the Index in 2H 2003.

It is also worthwhile noting that current consumer sentiments on the Economy and Quality of Life, though very optimistic, are in fact the weakest yet.

NOTE TO EDITORS: This news release is distributed with an accompanying chart that shows current MasterCard Worldwide Index of Consumer Confidence scores by market compared with several significant points in the history of the survey.

More information on the Index can be found at the website www.masterintelligence.com

About the MasterCard Worldwide Index™ of Consumer Confidence
The MasterCard Worldwide Index™ of Consumer Confidence survey has a 15 and a half-year track record of consumer confidence indices collected from more than 160,000 interviews, unequalled both in scope and history across Asia/Pacific.

The MasterCard Worldwide Index of Consumer Confidence is the most comprehensive and longest running survey of its kind in the region. It has demonstrated its precision at several important junctures as a barometer of consumer sentiment. In June 1997, the Index revealed a decline in consumer confidence – one month prior to the devaluation of the Thai baht that triggered the regional economic crisis. More recently in June 2003, the Index score for Employment in Hong Kong dropped to a low of 20.0. This was subsequently reflected in Hong Kong’s unemployment rate, which peaked just before September 2003 at 8 percent.

The survey began in 1H 1993 and has been conducted twice yearly since. 13 markets participate in the survey: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam. Vietnam made its debut in the December 2003 report, replacing India, which is now covered by the SAMEA (South Asia/Middle East/Africa) survey. The last Asia/Pacific MasterCard Worldwide Index of Consumer Confidence survey was conducted from 2 May to 26 May 2008. 5,404 qualified respondents were surveyed in the 13 markets with the sample being representative of the middle and upper income groups in each market. In each market except China, 400 or more people were surveyed. In China, a total of 600 interviews were conducted in Beijing (200), Shanghai (200) and Guangzhou (200).

The Index is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. Five economic factors are measured: Employment, the Economy, Regular Income, Stock Market and Quality of Life. The responses are consumers' thoughts on the six months ahead (i.e. July to December 2008). Data collection was via personal, telephone and Computer Aided Telephone interviews with the questionnaire translated to the local language wherever appropriate and necessary. The survey has a margin of sampling error of plus or minus four percentage points at the 90 percent confidence level, except China, where because of the larger sample, the margin of sampling error is plus or minus three percentage points.

MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 18 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard^®, Maestro^® and Cirrus^®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to http://www.mastercard.com.

Statements in this press release which are not historical facts, including any statements about MasterCard's plans, strategies, beliefs and expectations, are forward-looking and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made. Accordingly, except for the company's ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Actual results may differ materially from such forward-looking statements for a number of reasons, including those set forth in the company’s filings with the Securities and Exchange Commission (SEC), including the company’s Annual Report on Form 10-K for the year ended December 31, 2007, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2008, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company’s results to differ materially from expected results.

Melissa Devine, PPR, 02 9818 0950, mdevine@ppr.com.au

		Period	Year	Crisis	HISTORICAL AVERAGE
	Current	Ago	Ago	Average	MASTERCARD
MARKETS	2Q 2008	4Q 2007	2Q 2007	4Q 97 - 4Q 98	WORLDWIDE INDEX
Australia	42.8	64.9	68.3	43.0	56.8
China	82.7	85.5	84.0	55.6	75.3
Hong Kong	83.1	85.9	84.7	16.9	56.6
Indonesia	36.7	57.8	53.5	27.2	65.7
Japan	29.0	48.6	66.8	5.4	31.5
Korea	27.7	64.1	48.5	26.1	51.7
Malaysia	36.9	72.5	71.0	40.9	72.8
NewZealand	37.1	56.3	57.1	38.5	58.8
Philippines	43.2	67.7	64.6	47.7	50.8
Singapore	87.3	83.6	83.3	34.4	67
Taiwan	71.3	29.7	35.6	45.1	46.9
Thailand	23.7	44.2	36.7	25.6	55.2
Vietnam	86.2	94.3	91.3	0.0	91.9
The Region	56.0	69.3	67.9	34.7*	60.2

Note: The Crisis period in the chart above is based on the reflection of the MasterCard
Worldwide Index™ of Consumer Confidence results, which may or may not coincide with actual chronology or the definitions of others.

Historical Average is the mean average of all Index scores up through six months ago but not including the current Index.

* The average excludes Vietnam as this market was not surveyed in 1997/98.