The latest report from MNI indicators sheds light on India’s worsening conditions. According to the macro-economic data collection and analyzing agency, consumer confidence in the world’s second most populous nation has fallen in the past four months with no signs of stopping. This has resulted in India’s lowest consumer confidence in history in December.
The report was released on January 8th, 2016 by MNI Indicators. The group is a leading agency responsible for producing monthly reports exploring the attitudes, perspectives and confidence across different regions and countries and specializes in macro-economic reports.
India’s consumers across regions and cities were surveyed and the result was not positive. With consumer confidence the lowest on record, respondents reported further deterioration in their personal finances and a gloomy outlook on the future of the business environment.
The MNI India Consumer Sentiment Indicator revealed that there were more optimists than pessimists overall, but it might not stay that way for long. This is due to a sharp decline with the indicator falling to just below 110 – a record low when compared to 133 in 2012.
As illustrated by the graph from MNI above, sentiment has been on a downward trend since the start of 2014 and took a nose dive since April of 2015. This is especially worrisome because of two reasons. It kept falling despite aggressive actions from the central bank to boost the economy and the decline was broad-based, meaning that all the five measures (durable buying conditions, long-term business conditions, short-term business conditions, expected personal finance, and current personal finance) that made up the sentiment were in the negative.
The three major reasons contributing to lower consumer confidence are the worsening business conditions, deteriorating personal finances, and alarmingly low employment outlook.
Low Expectations for India’s Business Climate
The report found that consumers’ perception of the current and expected business situation in India were at their worst ever. The indicator is below 100 for the very first time, showing that the number of pessimists about the economy outweigh that of optimists.
The current outlook on business condition looks to stay, according to the report. Overall, consumers feel that expected business conditions will be a bit better than they are now – but this indicator has also fallen to the lowest in the survey’s history.
One of the main reasons consumers felt less confident is poor economic development since the Modi government was elected in 2014, which questions the verity of the strength in India’s latest GDP figures.
India’s Consumers Are Being Hit Hard
Indian consumers feel that they’re in for the worst year yet regarding their financial situation at home, with sentiment towards both current and expected personal finances at their lowest recorded levels.
The current personal finances indicator is a measurement of whether a household is better or worse off financially than a year ago. It fell to a record low at only 101 this December. The downward trend started in May 2014.
The expectations for the future are no better than the current ones, with expected personal finances at a record low as well. Two of the main reasons behind the gloomy outlook are higher household expenses and worse employment conditions.
Employment Outlook Also at Record Lows
Falling for the fourth consecutive month, Indian consumers’ outlook on employment has hit a record low. The indicator was divided by region and the sentiment for future job opportunities was mutual throughout the country.
Even though employment outlook tends to fall in the second half of the year, the rate at which it has fallen and the new record it has set have been alarming.
The typical Indian consumer tends to think that times ahead will be rough with worsening economic conditions, deteriorating personal finances, and less job opportunities.