As we move into the second quarter of 2019, we expect Asia to remain one of the world’s key growth engines. Emerging markets in particular show large overall growth of at least 5% in most countries. This trend is reflected in high rates of expansion in consumer spending in Asia Pacific.

Despite this upward trend in emerging markets, consumption growth is forecast to remain relatively stable this year. China’s slowdown is beginning to impact its consumers’ willingness to spend. However, India’s Prime Minister, Narendra Modi’s populist policies are boosting disposable income in key elements of the electorate. All things considered, we expect Asia Pacific to develop more rapidly than other regions as its middle and affluent classes continue to expand.

FrontierView’s APAC 2019 Regional Outlook dives into each Asia Pacific country, delivering insights on what to expect this year. Here is an overview of how consumer spending in four key countries will impact multinationals.


2018-2020 Average Growth: 6.2% YOY
Overall Economic Forecast Confidence: Medium with downward bias

China’s factory activity continued its decline into the beginning of the first quarter of 2019, causing subdued wage growth and job uncertainty for workers. Domestic demand in China weakened in late 2018 as more consumers forewent purchasing big-ticket items.

However, the official new orders PMI sub-index climbed to 50.6 in February, from 49.6 in January. The Caixin PMI was also supported by an uptick in new orders, with the sub-index edging back up to expansionary territory at 50.2, compared to January’s 47.3, suggesting a rebound in domestic demand. The data for March was recently released, and this reversal is even more pronounced, though FrontierView does not expect the rebound to last long. The government has plans to focus on supporting consumption by lowering business taxes and cutting fees. We do not expect that the efforts will not fundamentally change the current balance favoring SOEs.

The specter of a trade war continues to haunt US-China relations. Companies trading between China and the US are likely to feel the most pain as continued uncertainty – and possibly additional tariffs – create disruptions in supply chains and trigger sudden swings in product demand. MNCs, including companies not directly invested in China, should make plans to manage the effects of continued tension.


2018-2020 Average Growth: 7.3% YOY
Overall Economic Forecast Confidence: Medium

India’s growing population, continued urbanization, and increasing income levels will generate opportunities for multinationals for years to come. Economic growth will be driven by consumer spending, which will be fueled by recent changes in fiscal policy.

Narendra Modi’s administration is focusing on increasing consumer spending as it attempts to boost growth before national elections. The administration announced several policy measures that aim to increase consumption among the middle class and farming communities in India:

  • Income tax relief for the middle class: The finance minister proposed a full tax rebate for individuals with incomes of up to INR 500,000 (approx. US $7,000), an increase from the current threshold of INR 250,000 (US $3,500)
  • The Pradhan Mantri Kisan Samman Nidhi Yojana, a farmer income support program: The government will provide small farmers (land holdings of up to five acres) a direct cash transfer of INR 6,000 (approx. US $85) annually. This will benefit 120 million small farmers in the country.

2018-2020 Average Growth: 5.2% YOY
Overall Economic Forecast Confidence: Medium

Indonesia’s consumers are positively predisposed toward foreign brands, particularly American and Japanese companies in the premium segment. These preferences, coupled with its large and growing middle class, provide an opportunity for MNCs in the market. Companies should ensure their taxes are in order when capitalizing on consumer spending, due to increased tax scrutiny in the area in the coming years.


2018-2020 Average Growth: 6.4% YOY
Overall Economic Forecast Confidence: Medium

Vietnam is attracting foreign investment in the processing and manufacturing sector, encouraging a rise in the country’s middle class. An increase in disposable income, coupled with subdued inflation and rapid urbanization, are generating confidence in Vietnam’s consumer class.

Asia will maintain its position as the world’s fastest-growing region in 2019 at 4.8% overall GDP growth, offering substantial white space for multinationals to explore. However, certain political uncertainties create risks for MNCs in the coming months. FrontierView helps MNCs determine which potential disruptors to APAC will have the largest impact on their most important markets in 2019. We can help your business build a contingency plan through our fact-tested framework to ensure that your 2019-2020 strategic plans stay on track.

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