US slowdown rattles Asia's agencies

Agencies in Asia-Pacific are bracing themselves for a possible fallout as the US economy appears to be grinding to a halt. According to figures provided by ACNielsen and MindShare, the level of adspend in 2000 was higher than for the year before, indicating that the late '90s Asian financial crisis was well and truly over. However, estimates this year are decidedly more conservative, taking into account a possible downturn in the US. Underlining the more conservative mood, growth estimates for China have been placed at 20 per cent compared with 60 per cent last year. MindShare regional business director Chris Walton said that if the American economy slowed significantly, it could have a knock-on effect on Malaysia, Hong Kong, Singapore and Taiwan. However, he said the jury was still out over what would actually happen. "The debate is still on-going as to whether the US will go into a recession or if it's going to be a soft-landing," Mr Walton said. Grey Worldwide Asia-Pacific president Eric Rosenkranz said a recession or a soft landing could mean the same thing for the region's advertising industry because the issue in the US was not unemployment but consumer confidence. "If it's a full-blown recession, Americans will cut back on their spending. If it's a soft-landing, they'll still cut back on spending because although they have a job, their savings are down and their stock portfolio is sharply down compared with this time last year. "And what are they going to cut back on? They'll cut back on computers, electronics, toys and textiles, all of which are major industry categories in Asia." Mr Rosenkranz said that although he was forecasting Grey to turn in another record year, precautionary measures have been implemented. "I have advised our people to watch their budgets closely and be sensitive to economic indicators and to watch hirings because really this is not the time to be taking on new staff," he said. Worldwide agency heads said they too were cautious about their prospects for this year. Mr Miles Colebrook, JWT International group president, said: "Worldwide we remain cautiously optimistic. The US and Europe have slowed from the heady heights of 2000 but the outlook remains strong." WPP, which is JWT's parent, saw pre-tax profits for 2000 soar 43 per cent to pounds 366 million, however it predicted slower growth for 2001. "2001 has been ushered in with a multitude of gloomy prognostications. Some may prove to be justified. But early indications are that the worldwide growth of advertising expenditure will be around five to six per cent," a statement said. Asia-Pacific Adspend (1996-2001) All in local currencies (000s) Country 1996 1997 1998 1999 Japan (Yen) 5,769,900,000 5,990,100,000 5,759,700,000 5,586,909,000 Australia (Adollars ) 4,832,711 4,989,548 5,263,040 5,612,738 China (RMB) 27,229,000 35,899,000 44,244,482 50,776,000 Hong Kong (HKdollars ) 16,986,411 20,399,872 20,802,737 20,261,866 Indonesia (RP) 4,140,000,000 5,094,000,000 3,757,000,000 5,612,000,000 Korea (Won) 4,821,909,690 4,857,487,388 3,625,697,389 3,806,982,258 Malaysia (Rg) 2,413,473 2,614,366 2,167,787 2,519,114 New Zealand (NZdollars ) 1,448,259 1,535,194 1,653,705 1,752,927 Philippines (Peso) 33,340.51 42,533.26 45,453.65 52,367.27 Singapore (Sdollars ) 1,137,465 1,275,187 1,186,390 1,219,916 Taiwan (NTdollars ) 41,094,072 48,585,565 61,876,144 59,338,716 Thailand (Baht) 47,271,000 46,782,000 35,917,000 39,026,000 Vietnam (USdollars ) 66,622 82,680 85,160 85,757 Country 2000 Est. % Change 2001 Est. % Change Japan (Yen) 5,698,647,180 2.0 5,812,620,124 2.0 Australia (Adollars ) 6,624,662 18.0 6,306,472 -4.8 China (RMB) 81,241,600 60.0 97,489,920 20.0 Hong Kong (HKdollars ) 23,301,146 15.0 25,165,238 8.0 Indonesia (RP) 6,927,000,000 23.4 7,619,000,000 10.0 Korea (Won) 4,263,820,129 12.0 4,775,478,545 12.0 Malaysia (Rg) 3,157,332 25.3 3,512,597 11.3 New Zealand (NZdollars ) 1,774,308 1.2 1,818,666 2.5 Philippines (Peso) 55,172.68 5.4 55,172.68 0.0 Singapore (Sdollars ) 1,494,506 22.5 1,500,000 0.4 Taiwan (NTdollars ) 62,305,652 5.0 65,420,935 5.0 Thailand (Baht) 47,600,000 22.0 53,445,000 12.3 Vietnam (USdollars ) 89,187 4.0 92,754 4.0 Source: ACNielsen/MindShare Estimates.

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