Santanomics: Ireland tops Christmas spending league
Last year, for example, total spending over the Christmas period in the major Western economies amounted to around $445 billion. But who are the big spenders? Which nation's shoppers embrace the seasonal spending spree with a ho! ho! ho! and which shun it with a no! no! no! PwC's economists set out to discover.
Based on average spending per person over the Christmas period, the 2013 results show that:
• Ireland tops the league, with spending of around $1,200 per person;
• Of the major Western economies, the UK leads the way, spending around a third per person more than shoppers in the US; and
• Of the Eurozone countries included in the sample, French Christmas spending per person is second to Ireland, followed by Germany and Italy.
What about emerging markets? PwC's analysis includes the two biggest emerging markets that celebrate Christmas, Brazil and Russia and shows that per person spending over the Christmas period in these countries is relatively low. But when looking at total spending over the Christmas period, Brazil and Russia rank in the Top 10. This is because they are homes for a large number of consumers, even though individual spending might be comparatively low.
A closer analysis of Christmas spending per person shows that the financial crisis is still having an impact. Says PwC senior economist Richard Boxshall: "Some of the scars of the financial crisis are still visible in Christmas spending habits: US Christmas spending remains 10% behind that of 2007 in real terms. In Greece, real per person Christmas spending dropped by around 60% overall in the six years to 2013." Spanish and Portuguese real Christmas spending per person also remains significantly below 2007 levels.
The UK and Germany are the only major Western economies where Christmas spending has bounced back to exceed pre-crisis levels in real terms. Added Boxshall: "Shoppers of the UK and Germany are determined to have themselves a merry little Christmas."
Assumptions and methodology
The following approach was used to obtain estimates of Christmas spending:
• We obtained annual household consumption data from the World Bank and monthly retail sales data from national statistical agencies.
• We used the retail sales data to convert annual household consumption data into a monthly series. To do this we assumed that household consumption follows the same trend as retail sales.
• Using this new series we defined and estimated Christmas spending as the excess expenditure arising in November and December compared to the other months of the year. However other seasonal spending patterns may exist during a calendar year and so these numbers should be interpreted as giving a broad indication of cross-country differences in Christmas spending habits as opposed to precise dollar estimates.
• We limited our analysis to the G7 excluding Japan (which we have called the major Western economies), Brazil and Russia, and the peripheral Eurozone economies which we monitor. We excluded China, Japan and India as Christmas is not a traditional holiday in these countries.
• All of our numbers are in constant 2013 US dollar terms.
The December edition of PwC's Global Economy Watch can be found at www.pwc.com/gew
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