Retail spending picks up, but recovery uneven

There has been a gradual recovery in retail spending in Emerging Asia during 2014. The top performing countries are Indonesia and Malaysia, where retail sales are expanding at a double digit pace. In contrast, retail spending in Thailand is falling in annual terms, in part because of the shock to confidence caused by the ongoing political crisis. Looking ahead, with inflation falling, labour markets generally healthy and monetary policy set to remain loose across most of the region, we think the consumer recovery has further to run. However, the outlook is uneven, with high levels of household debt likely to be a constraint on spending in a number of countries, notably Korea, Singapore and Thailand.