Asian consumers are tightening their belts as they prepare for a coronavirus-induced hit to their finances, according to a new study.
Shoppers in China, South Korea, India, Japan and Indonesia have cut back on clothing, skincare and electronics purchases as concerns mount over the outlook for incomes and savings as the pandemic rattles economies across the globe, the McKinsey report found.
Groceries, household supplies and in-home entertainment, meanwhile, have continued to capture share of wallet as people hunker down in their homes, according to the survey of five of Asia’s leading economies.
The study, which surveyed between 500 and over 1,000 people in each market, was conducted from March 23 to 30, as the extent of the virus began to unfold globally. It builds on an earlier survey in China, taken between Feb. 21 to 24.
Respondents across the board expected the virus to have a net negative effect on their household finances over the first two weeks of April. That dip would likely last at least two to six months, the majority agreed.
South Koreans were among those most concerned about a hit to earnings, while Indonesians feared a surge in outgoings and a depletion of savings.
Despite that, most people felt confident their country’s economy would bounce back
Around half of respondents in China, India and Indonesia said they expected their economies to recover in two to three months, while most of the remainder anticipated a six to 12-month timeline. Chinese confidence in a quick recovery was up 5% from the previous month.
Meanwhile, respondents from South Korea and Japan struck a more cautious note, anticipating longer-term implications of six months or more.
The consumer consensus reflects the spread of the virus more broadly.
China, the initial epicenter of the outbreak, has shown signs of cases stabilizing and has begun to open up. However Japan, newly under a state of emergency, has seen its cases rise over recent weeks. Indonesia, meanwhile, has yet to introduce any nationwide lockdown.
The report comes as the International Monetary Fund released its global economic outlook for 2020. It predicts that this year, for the first time in 60 years, Asia will record no economic growth.
Barring within Japan, economic woes did not rank highest among respondents’ concerns, however. In China and South Korea, uncertainty over the duration of the outbreak and subsequent lockdowns were the chief concern, while in Indonesia and India, public health and the safety of family members ranked top of mind.