Two-thirds of Singapore consumers optimistic about local economy, but over half lack financial preparedness: survey
UOB Asean Consumer Sentiment Study finds Gen Zs aged 18 to 25 are particularly ill-prepared in insurance and legacy planning
SINGAPORE consumers are more optimistic about the local economy, with more than two-thirds of respondents (68 per cent) expressing confidence in the current economic environment.
This marks a 20 percentage point surge from last year’s level, UOB found in its latest Asean Consumer Sentiment Study (ACSS) 2024.
“It’s heartening to see improved sentiments of Singapore consumers this year, indicating that Singapore has done well to help us weather through the economic uncertainty in this region,” said Jacquelyn Tan, UOB’s head of group personal financial services, at the launch of the survey report on Monday (Aug 19).
However, the report also highlighted that “a significant majority of Singapore consumers are not taking adequate steps to secure their financial future”, with the youth being the most underprepared.
UOB partnered management consulting firm Boston Consulting Group for the fifth edition of the bank’s annual flagship survey, polling a total of 5,000 individuals aged 18 to 65, with 1,000 respondents each from Indonesia, Malaysia, Singapore, Thailand and Vietnam.
The survey was conducted online from May 14 to Jun 6, with respondents categorised into four age groups – Generation Z (18 to 25 years old), Generation Y (26 to 41 years old), Generation X (42 to 57 years old) and Baby Boomers (58 to 65 years old).
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More optimism than regional peers
The proportion of Singapore respondents who felt positive about the current economic environment in their country is 14 percentage points higher than the regional average, the report found.
This “optimism compared to the region stems from Singapore’s tight labour market, evinced by a high job vacancies-to-seekers ratio with retrenchment numbers still fairly contained”, noted UOB in a separate statement on Monday. .
The bank added that “Singapore’s growth momentum could strengthen in the second half of this year on improving external demand, should key central banks in advanced economies begin or continue to lower their policy rates, lifting investment and consumption activity abroad”.
Reflecting this optimism, expectations of a major recession in the next year have improved by 10 percentage points among Singapore consumers compared with the previous year.
The proportion of Singapore respondents expecting a major recession in the near term is also 12 percentage points lower than the regional average, which has remained relatively unchanged from last year.
Persistent inflation remained the top concern of Asean consumers, with 63 per cent of respondents citing it as their primary worry. This was followed by increased household expenses (58 per cent) and a decline in savings and wealth holdings (52 per cent).
Notably, Singapore consumers appeared less worried than their regional peers, with drops in the levels of concern across all financial issues compared with the previous year.
The proportion of those concerned about rising inflation fell by 16 percentage points to 55 per cent, while those fretting over increased household expenses and declining savings or wealth holdings both dropped 12 percentage points to 52 per cent and 47 per cent, respectively.
Need to shore up financial preparedness
In a newly introduced segment on financial literacy, ACSS 2024 polled Singapore consumers on their financial allocations according to the guidelines identified in the Monetary Authority of Singapore’s Basic Financial Planning Guide.
These rules of thumb include setting aside three to six months’ worth of expenses as emergency funds, obtaining insurance coverage for death, total permanent disability and critical illness, investing at least 10 per cent of take-home pay for retirement and other financial goals, as well as making wills and Central Provident Fund (CPF) nominations.
The study revealed that only 10 per cent of respondents met three or all four financial guidelines, while 37 per cent met two.
Alarmingly, 35 per cent adhered to just one, and 18 per cent met none. Gen Zs were particularly concerning, with 26 per cent ticking off none from the list.
Insurance was identified as the area where Singapore consumers were particularly underprepared. Only 37 per cent of respondents had critical illness coverage, with this proportion dropping to 17 per cent among Gen Zs.
For death and total permanent disability insurance, coverage stands at 22 per cent for Singapore consumers and 13 per cent for Gen Zs. More concerningly, more than 10 per cent of Gen Zs (12 per cent) reported having no insurance at all.
In terms of legacy planning, half of Singapore respondents have made a CPF nomination. Due to their youth, Gen Zs are less prepared, with only 29 per cent having made such nominations.
In contrast, the younger Gen Zs and Ys were the most diligent in investing, with 55 per cent and 62 per cent, respectively, adhering to the rule of thumb on investment. Additionally, more than half (59 per cent) of Singapore’s Gen Zs surveyed also hold sufficient emergency funds.
Tan noted that ACSS 2024 has highlighted a need for the youth to shore up their financial preparedness.
“We believe that they are taking positive steps, for example by setting aside sufficient emergency funds and investing for their future, but they require more help in insurance coverage and legacy planning,” she added.
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