There’s no way to truly cover off on the ins and outs of each of the world’s myriad economies in a single sentence, but generally speaking, global conditions for the fast-moving consumer goods (FMCG) industry remained positive in second-quarter 2018. Some regions showed significant growth promise, while others showed a slight pullback from gains earlier in the year. With many markets experiencing notable increases in GDP growth, conditions were favorable for manufacturers and retailers. GDP growth, however, doesn’t always mean consumer spending will increase, particularly when inflation is rising.
In contrast to the growth in GDP across many markets, and perhaps reflective of inflationary concerns, consumer confidence around the globe dipped slightly in the second quarter, with the Confidence Board reporting a two-index-point drop in global confidence. That drop in consumer sentiment was reflected in a slight pullback in spending in certain markets, as skepticism about the future had some consumers feeling as though their free cash would be better served in savings rather than on the discretionary purchase.
We saw strong economic growth across Asia-Pacific as well, where GDP increased across all markets, evidence that U.S.-China trade tensions aren’t yet affecting the region’s economic scenario. As was the case in Central and Eastern Europe, however, the economic strength was countered by rising inflation (although not as notably). Interestingly, the countries with the highest GDP growth also have the most optimistic consumers. That said, however, 11 countries across Asia-Pacific experienced declines in consumer confidence, resulting in a three-index-point drop for the region overall.
Regardless of region or market, consumers need to be at the forefront of all FMCG strategies. And that means manufacturers and retailers need to engage with and appease young, urbanized and digitally primed consumers.
