COVID-19 and the measures taken to control its spread have taken a heavy toll on the local economy with rising unemployment, businesses closing and wage insecurity. Even before COVID-19 the local economy had been under pressure with the US-China trade war impacting exports, while local political unrest continues to damage consumer confidence.
In response to the financial challenges posed by COVID-19, the Hong Kong government launched a cash pay-out scheme in 2020. Holders of a valid Hong Kong Permanent Identity Card who are aged over 18-years-old can apply to receive a cash pay-out of HKD10,000.
In terms of gross lending, the dominant form of consumer credit is card lending. Consumers in Hong Kong use their credit cards to pay for everything, with the advent of contactless technology providing even greater convenience and expanding the uses of this form of payment.
Providing COVID-19 is contained, it is anticipated that consumer credit should return to growth in 2021, although gross lending may not return to pre-COVID-19 levels until 2022. COVID-19 is likely to have a big impact on the local and global economies over the forecast period, with huge sums being required to support consumers and businesses through these challenging times.
Hong Kong has significant income disparity and with it having one of the least affordable housing markets in the world many consumers are unable to afford their own home. As such, many residents have also found it difficult obtaining credit through mainstream financial service providers.
The granting of licenses to virtual/digital banks is also expected to impact the competitive landscape. With increased competition banks will need to look for ways to stand out in an increasingly congested marketplace.
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Understand the latest market trends and future growth opportunities for the Consumer Credit industry in Hong Kong, China with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Consumer Credit research and analysis database.
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