Asean is a region on the rise, with expanding domestic demand, strong foreign direct investment and a robust tourism industry. Combined regional gross domestic product (GDP) doubled between 2009 and 2022 to reach US$3.6 trillion ($4.8 trillion) — at the heart of that growth is the rapidly evolving Asean consumer.
Growth in the Asean-6 countries of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam averaged 3.8% in 2023, rising to 4.5% in the first half of 2024. This compares favourably to major economies, which grew at an average of 3.1% and 3.2% over the respective timeframes.
Asean’s story is one of continued consumption. Two trends are set to shape the future of that consumption — an optimistic but economically aware consumer and one which is increasingly resilient and open to customer-centric products and services — a situation laid out in detail in the Asean Consumer Sentiment Study 2024, developed in partnership between Boston Consulting Group (BCG) and United Overseas Bank .
Our findings demonstrate an intriguingly pragmatic optimism across the region. What’s also clear, however, is more work is needed to unlock the full potential of this expanding consumer base.
Asean consumers are carefully navigating the complex economic landscape but are positive overall. The majority (76%) of consumers have net positive emotions about economic conditions. Indonesians and Vietnamese are the region’s most optimistic consumers, displaying a joint 84% in net positive emotions.
Yet, it is worth noting that while more than half of consumers across the country are happy about the current and future economic situation, this optimistic sentiment is slightly weaker than our 2023 survey. The higher inflationary environment during the period of our 2024 study is likely to have influenced this sentiment to some degree.
See also: Bank of Thailand sees inflation in 1% to 3% range through 2026
The consumers’ optimism across the region is reflected through a resurgence in the ‘experiential’ spending categories such as entertainment (concerts, events and festivals), lifestyle (spa and massages, for example) and leisure travel alongside dining out — where spending has increased for about 35% of Asean consumers, especially for the Gen Z (46%) and Gen Y (39%).
This confidence in discretionary spending is likely to stem from a growing sense of financial security, where more than four in five consumers within the region expect themselves to be the same financially or better off by this time next year.
Again, Indonesian and Vietnamese consumers are the most optimistic in this regard. Notable positive changes in other areas, including consumers being less concerned about work-related challenges and health and well-being now than previously, could also have fuelled this higher spending behaviour.
See also: Higher minimum wages in Asean next year must come with labour productivity gains: OCBC
The overall optimism indicates the readiness of the Asean consumer to bounce back after the long spell of macro-challenges and their thirst to enjoy products and experiences catering to their aspirations and not just their needs.
Tourism and alternative modes of payments
Tourism is one strong area where this optimistic sentiment is reflected strongly. High intra-regional travel within Asean has contributed to strong cross-border spending, particularly for Singaporean and Vietnamese travellers.
Two-thirds of Asean consumers have spent overseas within Asean in the past year — rising to three-quarters in the case of Singaporeans. Overall, Singapore, Thailand and Malaysia are the top Asean markets where regional spending has taken place.
More frequent travelling may also have catalysed the shift in payment preferences, as consumers lean towards alternative payment modes with higher convenience. Two-thirds (62%) of respondents prefer paying by physical or mobile credit and debit cards when travelling abroad, displacing cash as the most preferred payment method, with the proportion rising to 71% for Vietnamese consumers.
Asean consumers have always been at the forefront of digital adoption, and it is well apparent through their increased utilisation of digital banking and demand for personalised services and solutions. Online is now the preferred channel for many activities, including performing overseas fund transfers and gathering information about new products.
Around a quarter of Asean consumers still prefer omni-channels for high monetary value transactions, fraud reporting and seeking financial and investment advice — activities which are seemingly more complex and require higher levels of trust and support. This underlines the importance of banking and financial institutions continuing on the path of a hybrid channel strategy.
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On personalised products and services, there are higher expectations by Thai and Vietnamese consumers, where almost seven out of ten prefer personalised offers to be delivered via mobile apps or email. This presents a clear opportunity for businesses to tailor products and solutions catering to the specific needs of different segments, going beyond traditional segmentation and venturing into hyper-personalisation.
For instance, UOB successfully deployed hyper-personalisation at scale through its UOB TMRW mobile app, serving more than 129 million AI-driven nudges to 3.6 million of its regional customers. The impact is striking — more than one in three customers interacted with the insights, and customers who are digitally engaged have 100% higher current/saving account balances and 50% higher average card spending.
Serving an evolving Asean consumer
Despite the challenges in the prevailing complex economic landscape, Asean’s regional consumer continues to evolve more rapidly now than ever before. It is, therefore, imperative for businesses to fill gaps in how they serve the changing behaviour and preferences of the Asean consumer to stay in the game.
Key trends that have shown a strong and resilient trajectory in the last couple of years include a higher propensity to acquire unique experiences, accelerated digital adoption and usage in various lifestyle aspects, and the desire to be served differently from others. These trends present opportunities to catapult companies into emerging as leaders of the future by identifying unsaturated demand areas to serve with personalised solutions, leveraging a balanced and well-thought-through use of hybrid channels.
With these elements in place, businesses will be positioned to serve the needs of evolving Asean consumers in this remarkable and dynamic region of growth.
Aditi Bathia is a consumer insights expert for Southeast Asia at BCG, and Jasmine Yeo is the executive director and head of insights and transformation at United Overseas Bank
