The impact of the COVID-19 pandemic and consequent economic downturn has limited demand for consumer credit in Russia. Driven by the economic context, demand for consumer credit has suffered from a significant drop in consumer confidence and willingness to purchase expensive items with credit.
Auto lending in Russia was hit particularly hard by the COVID-19 outbreak, with sales of new cars crashing throughout the country and demand for loans thus plummeting. Indeed, car sales were already declining in the country before the pandemic, with the government supporting the industry with subsidised programmes.
In response to the current crisis, the Russian government is taking a number of measures in a bid to stimulate demand and support industry players. For example, in order to support auto lending, the government will continue to offer generous subsidies.
In Russia, the development of consumer credit in 2021 and beyond will depend heavily on the rate of economic recovery. Despite the severity of the recession, strong government support in response to the economic fallout of the pandemic will help to safeguard jobs and boost demand.
Russian banks, especially leading players, will continue to lower interest rates on loans in a bid to attract price sensitive consumers. In addition, banks are also developing better quality and more sophisticated credit products that cater to the needs of different consumer groups.
The COVID-19 pandemic has further fuelled consumer awareness and interest in digital solutions in daily life. This has also accelerated the already existing trend towards digital financing offers, which is reflected in the surging number of loan agreements completed, at least partly, online.
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This report originates from Passport, our Consumer Credit research and analysis database.
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