The Lunar New Year, which kicks off on Feb. 16, is East Asia’s most important holiday season.
The festival, also known as Chinese New Year, can be described as Thanksgiving, Christmas, and even New Year’s Eve rolled into one holiday, which marks the beginning of spring and the coming together of families.
Other than China, where many go on a week-long holiday, countries like Singapore, Malaysia, South Korea and Vietnam also celebrate the festival as public holidays.
As a result, the celebration impacts stock markets, factory production and economic activity.
This year, it’s also being cited by some as contributing to bitcoin’s slump in January as Asian traders are perceived to be cashing out their cryptocurrencies to buy gifts for the holiday season.
Big budgets for the holidays
Last year, Singapore-based United Overseas Bank polled respondents in three Southeast Asian countries to find out their budgets for the Lunar New Year.
In Singapore, a survey of about 500 revealed the average holiday budget to be $1,890 (roughly 2,500 Singapore dollars).
The same survey was also carried out in Indonesia and Malaysia, where the intended spend per person came in at about 10 million Indonesian rupiah (about $800) and 4,201 Malaysian ringgit (about $1,000), respectively.
In all three countries, people intended to spend money mainly on food, travel and gift giving.
Similar data for China was not available, but the country’s consumption has been growing, Last year, Chinese consumers reportedly spent 840 billion Chinese yuan (just under $140 billion) in retail and catering services over the week-long holiday, an increase of 11.4 percent from 2016.
Gifting money goes digital
Red packets, also known as hongbao in Mandarin Chinese, are an important tradition of the festival. They’re envelopes containing gifts of money given by married people to unmarried people — although many also have the practice of giving money to their parents.
In China, digital red packets have contributed to the growth of mobile payments, notably for Tencent social media platform WeChat.
The tech conglomerate only introduced e-hongbaos in 2014, but their popularity has skyrocketed. More than 16 million digital packets were sent on the eve of Chinese New Year in 2014, but that grew to 14.2 billion for the same day last year.
The phenomenon hasn’t quite taken off in Southeast Asia in the same fashion, but consumers are starting to bite.
Singapore-headquartered bank DBS declined to reveal total digital red packet numbers, but said that there were five times more e-hongbaos sent last year compared with 2016.
More importantly for consumers, DBS revealed that the average amount sent in digital red packets in Singapore last year was S$26 (about $19.60) — several times higher than the going rates of physical red packets, which is between S$6 ($4.50) and S$10 ($7.60).
Chinese tourism boom
In China, the festival also results in the largest annual migration of people in the world. During what is known as chunyun, a 40-day travel season, nearly 3 billion trips are expected to be made using public transport between Feb. 1 and March 12, according to China’s Ministry of Transport.
Many of those trips are made by city dwellers heading home, but many also take the time to go elsewhere, with top destinations being Beijing, Shanghai and Guangzhou.
Domestic travel spending last year rose 15.9 percent from 2016, with 344 million domestic tourists spending 423.3 billion yuan ($61.5 billion), according to China’s National Tourism Administration.
Increasingly affluent Chinese are also looking to travel abroad. Last year, 6.15 million Chinese travelers took international trips, a 7 percent increase from 2016, with overseas spending estimated to amount to about 100 billion yuan (nearly $16 billion).
The number is expected to grow again this year. Last week, a report from the China Tourism Academy and Ctrip said they expected the number of outbound Chinese travelers this year to reach a new record of 6.5 million.
These vacationers are expected to spend an average of about 9,500 yuan (about $1,500) and are looking to popular destinations such as Thailand, Singapore and Vietnam.
CIMB private banking economist Song Seng Wun said Chinese New Year always brings a “short-term lift for consumption for Chinese communities around the world from Beijing, Jakarta, London, Los Angeles, to Singapore.”
He added that, in Singapore, some indicators of Chinese New Year spending that give him signals for the health of the economy are the demand for gift baskets and hampers and the queues for bakkwa – a sweet barbecued pork jerky in Singapore which sells for about $38 (S$50) per kilogram, and gets more expensive the closer it gets to the actual holiday.
“And since more and more Chinese are taking their long holiday breaks outside of China, I’ll be watching out for how busy our Merlion will be over this Chinese New Year period,” he said.