Survey: Inflation and threat of recessions remain top concerns among HKers

Hong Kong consumers are still concerned about inflation and the threat of recession despite improving economic conditions, according to the latest TransUnion study. 

The Consumer Pulse Study conducted in May 2023 has surveyed 910 local consumers. The survey found consumer sentiment improved significantly in the context of more positive economic conditions. Overall, 46% of respondents reported better than planned household finances, a 20 percentage point increase from Q1 2023. Additionally, 42% of respondents reported higher household incomes over the past three months, a similarly significant increase of 19 percentage points from the previous quarter.

The survey revealed that 62% of consumers are optimistic about their household finances in the next 12 months, up significantly from 34% in the previous quarter. Half (50%) of consumers also expect their household income to increase in the year ahead, up 16 percentage points from last quarter.

However, the survey also showed that consumers still have some concerns despite improving economic conditions, with inflation (58%), the threat of recession (44%) and stock market volatility (37%) leading unease, followed by rising interest rates (35%). Concerns over stock market volatility and rising interest rates have grown by seven and five percentage points quarter-over-quarter, respectively. Comparatively, concerns over inflation and the threat of recession have reduced by 10 and seven percentage points, respectively.

Furthermore, more than a quarter (27%) of those surveyed said they had increased their discretionary spending, and over a third (34%) of consumers also added or expanded their digital services, subscriptions and memberships in the last three months – an increase of 15 percentage points compared to last quarter. The proportion of consumers that plan to increase household spending increased, with almost a third (30%) of consumers intending to increase their discretionary spending in the upcoming three months, compared to 25% in the last quarter.

In terms of interest rates, Gen Z (37%) has the most interest in new credit services, although less than one-third (29%) of Hong Kong consumers plan to apply for new credit or refinance, unchanged from the previous period. However, across all demographics, over half (57%) report that rising interest rates have a moderate to high impact on their decision around seeking new credit, an 11 percentage-point increase from the last quarter.

Kevin Chen, principal of financial services research and consulting at TransUnion Asia Pacific, said, "There is no doubt that inflation, rising interest rates and stock market volatility will all continue to influence how consumers manage their household finances, but with its post-pandemic economy turn-around, Hong Kong's residents are clearly gaining confidence about their financial outlook."

"As consumer interest in new credit starts to rebound, financial institutions should capture opportunities in the market to grow their business. By using advanced analytics and modeling, they can better tailor their offering to the emerging needs of an increasingly positive consumer base," he added.

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