The development of consumer lending in Japan continues to be constrained by the traditionally negative image of debt in the country and the fact that it remains a cash-heavy society. However, Japan is also a society undergoing significant technological, demographic and cultural transition, which is having a positive impact on some areas of consumer lending, most notably credit cards, while also undermining demand in categories such as auto lending.
The long-delayed increase in consumption tax was finally implemented in October 2019, with the sales tax rate rising from 8% to 10%. This was the first rise in the tax for five years.
Demographic factors are exerting a growing influence on the development of consumer lending in Japan. The growing number of elderly citizens and the decline in the younger population are leading to a contraction of the labour force, which the Japanese Government is seeking to address partly by encouraging women to enter paid employment.
In 2019, the Bank of Japan maintained the negative interest strategy it introduced in 2016 primarily in order to prevent a spike in the yen having a negative impact on an economy that relies heavily on exports. The Bank of Japan has employed a tiered system, charging 0.
The forecast period is set to see continued growth in consumer lending, with most categories seeing increases in terms of both outstanding balance and gross lending. Card lending is set to be the most dynamic area, as the drive towards cashless payment and the rise of digital payment technologies enable credit cards to become more deeply embedded in consumers’ everyday lives.
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