What Is Driving Consumer Spending In ASEAN? 2

Consumer spending in ASEAN could grow by 50% in 3 years

ASEAN is the world’s third largest consumer market, just behind China and India. Nomura, the Japanese investment bank, forecasts spending in the five largest ASEAN countries can grow by 50% by 2020. This equates to an annual spending growth of nearly 17%.

Nomura strategist Mixo Das mentioned in an investor’s note, “The ASEAN consumption space is one of the more obvious multi-year growth areas in Asia.” He estimates that total private consumption in these five countries could grow by 9% annually to $1.8 trillion in 2020. In 2015, private consumption expenditure in these countries was $1.2 trillion.

Demographics in the ASEAN countries are favorable for growth in consumption expenditure. Consumer spending will likely be driven by

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  • higher disposable income with rising income levels
  • wider availability of credit in these regions and
  • rising propensity to consume.

Income levels in the ASEAN region have grown since 2000 at a strong pace and for some economies, GDP has nearly doubled in this period. Further, the ASEAN (ASEA) has a growing number of young population coming into the workforce that makes it one of the most compelling markets for investors.

Consumer based stocks will likely gain from rise in online retailing, growth in convenience stores, rising tourism in the region and higher leisure related spending. This will likely boost sales of consumer-based stocks in these regions. Additionally, growing internet penetration and data usage in these countries is favorable for e-commerce.

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In this series, we’re analyzing consumer stocks that are attractive in case consumer expenditure rises in the ASEAN as forecasted. We’ve looked at specific variables that tell us where the opportunity lies with rising income levels in the ASEAN  region and companies from the consumer sector that offer the most attractive valuations and have the greatest return potential.

For more about consumer stocks in emerging markets, you could read our article The Emerging Market Consumer Offers Return Potential at Attractive Valuations

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