‘Stunted’ disposable income growth to drag HK, China consumer spending
Disposable income in the market is expected to average 3.3% in 2022.
Households in Hong Kong and China will likely experience a “stunted growth” in disposable income in the next five years, which will drag its consumer spending growth across categories.
In a report, Fitch Solutions noted that the average household disposable income will increase by 3.3% year-on-year to $57,834.
This comes as Hong Kong suffers from stronger-than-expected inflationary pressures in 2022.
“This dynamic will continue over the medium term, where the average disposable income for Hong Kong households is forecast to grow by an average of 2.7% a year, to reach HKD498,000 (USD64,092) in 2026, while inflation will average 2.1% a year,” the report read.
“This will put weaken consumers' purchasing power in the city, forcing households to change their purchasing patterns.’
Fitch added that this will also likely shift spending patterns in Hong Kong as more consumers prioritise essential spending and non-spending.
Essential spending is expected to rise by 5.7%YoY whilst non-essential spending will climb by 5.3%YoY.