2.5% Increase in Retail Sales Predicted

2.5% Increase in Retail Sales Predicted for New Zealand in New MasterIndex of Retail

New Zealand, August 13, 2003 – Retail sales growth is looking positive in most Asia/Pacific markets, including New Zealand, in the second half of 2003 as the region recovers from the devastating impact of SARS and benefits from the gradual pick-up in the US economy, according to the inaugural MasterIndex of Retail forecast released by MasterCard International.

The forecast indicates that out of the 12 markets covered in the region, China is poised to lead in year-on-year percentage growth, with healthy growth expected from Thailand, Indonesia, the Philippines, Australia and New Zealand.

Marginal growth is anticipated in the remaining markets with the exception of Korea and Singapore, which can expect to see retail sales shrinking over the next six months.

Conducted twice a year in June and December, the MasterIndex of Retail is the newest addition to MasterCard’s MasterIndex suite of research products, providing six-month forecasts of retail sales growth in 12 markets: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand.

It joins the MasterIndex of Consumer Confidence™ - the most comprehensive and longest running consumer sentiment survey in the Asia/Pacific region - and the recently launched MasterIndex of Travel, which provides six-month outbound forecasts that are highly relevant to the travel and tourism, and related sectors.

The forecast for the second half of the year revealed that: Post-SARS, China tops the region for retail sales growth with forecasted 6.8% year-on-year growth.

Taiwan shows healthy signs of recovery from the outbreak with an expected 4.8% growth. Even in Hong Kong, marginal growth of 0.8% is predicted over the same period last year. South East Asia shows a positive outlook, with retail sales in Thailand, Indonesia and Philippines forecasted to expand by 5.5% year-on-year, and Malaysia expected to grow by 0.5%. Singapore, whose consumers are still pessimistic, is the only market in this sub-region that is anticipated to decline by 1.5%.

Korean consumers deepening pessimism manifests itself in the expected 2.5% retail sales contraction over the second half of last year. Japan is forecast to grow by 0.3% year-on-year. The Australia and New Zealand retail sectors are looking reasonably strong with anticipated 3.3% and 2.5% year-on-year growth respectively

2.5% Increase in Retail Sales Predicted for New Zealand in New MasterIndex of Retail August 13, 2003 Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard, commented that, “In times of rising market volatility and uncertainty, it is even more important to understand how consumer confidence, which is the critical link between potential purchasing power and actual spending, may impact on retail sales in the near term.

This is accomplished by MasterCard’s MasterIndex of Retail.”

The MasterIndex of Retail provides powerful predictive market intelligence that is highly relevant to the wholesale and retail industry, as well as sectors such as entertainment, food and beverage, hospitality, leisure and consumer goods manufacturing.

Combining 10 years of retail sales data , factoring in the secular trend of growth of the retail industry, and using the MasterIndex of Consumer Confidence as an independent variable , an estimate of retail sales value is obtained for the same six-month time horizon covered by the MasterIndex of Consumer Confidence.

“The MasterIndex of Retail is further testament to MasterCard’s knowledge leadership. Unequalled both in scope, history and proven precision in the region, our MasterIndex of Consumer Confidence survey – and now its associated retail and travel sector forecasts – is highly anticipated by analysts, academics, as well as corporate and public sector decision-makers. The MasterIndex has become synonymous with valuable and timely assessments of consumer expectations and industry outlook,” said Stuart McDonald, MasterCard’s senior vice president, Corporate Services, Asia/Pacific.

Individual Market Forecasts For Second Half 2003

Australia’s consumer confidence for the second half of the year shows a slight improvement over the preceding six-month period, but it is still pessimistic.

Australians appear to be most pessimistic with regard to their quality of life. Retail sales are forecasted to grow by 3.3% year-on-year in the second half of the year to reach A$74.4 million in sales value.

In spite of the SARS outbreak, Chinese consumers are still positive about the future. Their outlook on employment and the stock market, while still optimistic, appears to have declined somewhat.

In contrast, their expectations of quality of life remain strongly optimistic. Retail sales in China are poised to expand by 6.8% year-on-year over the next six months, with sales value reaching around RMB1.9 trillion.

The latest MasterIndex of Consumer Confidence showed a slight improvement in Hong Kong from the previous survey six months ago.

Hong Kong consumers’ outlook on both regular income and quality of life are the most pessimistic. Their view on the stock market is more upbeat.

The retail sector is expected to grow very minimally, by 0.8% year-on-year, in the second half of the year. Total sales value is expected to be around HK$82.7 billion.
2.5% Increase in Retail Sales Predicted for New Zealand in New MasterIndex of Retail August 13, 2003 Indonesians are slightly more optimistic about the next six months than they were about the first half of the year.

While their outlook on employment and quality of life is still slightly pessimistic they are positive about the economy and strongly optimistic with regard to regular income. A year-on-year expansion of 5.5% in retail sales to reach a total sales value of 208.2 trillion Rupiah is forecast. Consumer confidence in Japan is still extremely negative, although slightly improved from the first half of the year.

Retail sales are expected to grow very slowly at 0.3% year-on-year in the second half, with total sales reaching ¥57.9 trillion. The latest consumer confidence level in Korea shows a deepening pessimism. The outlook on employment is especially downcast. Its retail sector is expected to contract by 2.5% year-on-year, with a total sales value of about 62 trillion Won in the second half of the year.

Malaysia remains optimistic, albeit at a slightly lower level from six months ago. Retail sales are expected to expand marginally at a year-on-year growth rate of 0.5%, to reach an estimated 15.1 billion Ringgit over the next six months.

The latest MasterIndex of Consumer Confidence for New Zealand shows a decline in optimism. With the exception of the strongly optimistic regular income outlook, three of the remaining four indicators – employment, economy and the stock market – are viewed negatively in the six-month period ahead. Over the same timeframe, retail sales are expected to grow by 2.5% year-on-year, reaching NZ$14.5 million in total sales value.

The Philippines is showing a neutral consumer confidence outlook for the second half of the year, a very significant improvement over the deep pessimism recorded six months ago. Retail sales are anticipated to expand by a reasonably healthy 5.5% in the course of the second half of the year. Total sales value is estimated to reach 939.7 billion Peso.

Singapore is showing a slight improvement in consumer confidence over six months ago. Consumers are still very pessimistic, especially regarding their regular income outlook. The retail sector is expected to decline by 1.5%, with total sales value estimated at S$12 billion.

Taiwan’s latest MasterIndex of Consumer Confidence shows a deepening pessimism compared with six months ago. Retail sales in Taiwan is forecasted to grow at 4.8% in the second half of this year, quite a healthy pace given the recent SARS outbreak. Total sales value over the same period is estimated at TW$1.38 trillion.

Thailand’s consumer confidence is at an all-time high, overtaking China as the most optimistic market in the region. Retail sales is forecast to expand by 5.5% year-on-year over the next six months, with total sales value estimated at 705 billion Baht.

2.5% Increase in Retail Sales Predicted for New Zealand in New MasterIndex of Retail August 13, 2003

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