Economy

Consumer sentiment in Russia in the background of a global tendency

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According to a research by Nielsen, in III quarter of 2016, the global consumer confidence index grew by 1% in comparison with the second quarter of 2016 and was 99%, which is a similar period last year.

Consumer confidence index – an indicator to identify the main trends in the labour market and determine the consumer behavior in the country. This index was first calculated by the Сonference Board in 1985. The creation of the index was connected with an economic theory of John Maynard Keynes. According to this theory, a consumer is an independent economic entity, the economic behaviour of which is determined by a “propensity to consume”. Along with propensity to consume, the consumer behavior of an individual is significantly influenced by the expectations and public opinion – subjective factors that can change consumer behavior of large groups of people. The consumer confidence index is one of the essential drivers of all economies in the world, and its studying allows to predict the factors that have an impact on it and what changes in this behavior may occur in the future.

The study of the global market has defined that 39% of consumers think that the outlook is good in the labour market, whereas only 9% of respondents assess the situation as excellent. In Russia, the situation is different: only 18% of respondents regard the prospects of the labor market as good, only 2% of consumers think the situation is excellent, and a number of respondents who believe that the situation is not very good, has reached 50%. 48% of global consumers claimed their own financial situation is good (in Russia – 30%), and 10% of respondents believe that their position is excellent (in Russia – 1%).

37% of the world’s consumers regard possible expenses as positive (in Russia – 15%), and 7% of respondents think of such possibility as excellent (in Russia – 1%). Overall, an average difference in average positive ratings between the global and the Russian consumers was about 18-20% in favor of the first. The overall index of consumer sentiment was 67% in Russia (+1% comparing to the second quarter of 2016).

Among the European countries, most of all, the biggest growth of consumer sentiment has was in the UK (106%;+8% comparing to the second quarter 2016), which may be connected with Brexit. The lowest Europe’s consumer sentiment in was noted in Ukraine (50%).

When calculating the index takes into account three indicators:

  • indicator reflecting consumers’ perception of prospects in the labor market
  • consumers’ financial situation
  • willingness to spend money

When the consumer confidence index gains more than 100 points, such a country will be assigned to the optimistic ones, but if the index is below 100 points, such country will be refered to the pessimistic.

Resources: Nielsen, Nielsen, Propensity to Consume or Consumption Function