Hong Kong’s retail sales plunged 10.5% in the first half of this year – the worst drop in 17 years – dragged down by the persistent tourism slump and economic downturn.
But the rest of year could see a slight pickup in retail numbers, as the Hong Kong Monetary Authority’s lower base last year would make growth easier, according to Mariana Kou, senior analyst at investment house CLSA. She forecast a 5% to 7% decline for the whole of 2016.
In June, retail sales declined 8.9% year on year, the 16th consecutive monthly contraction, while there was a dip of 8.4% in May.
During the Asian financial crisis in 1999, retail sales dropped 10.9% in the first six months of the year.
“At least the situation is not getting worse,” Kou said, adding that the June figure was roughly in line with analysts’ predictions of an 8.1% decline.
Kou said the city’s once-booming retail sector showed signs of stabilizing, but layoffs and store closures could continue in the second half of the year.
However, she noted that slight growth could be observed as early as this month purely due to the lower base effect. “It would not be genuine growth,” she said.
The June decline was led by jewelry, watches and other luxury items – usually popular with mainland visitors – which plunged 20.4% in sales.
This was followed by department store goods and clothing, which declined 10.5% and 0.6% respectively in June.
Retail sales in electrical goods and photographic equipment suffered a 25.7% dip.
Supermarket sales did better, with a rise of 1.9%, followed by sales of medicines and cosmetics, which increased by 5%, and the category of food, alcoholic drinks and tobacco, which rose 2.9%.
“Most of the member companies anticipate the downward trend to continue but slow down in the remaining year of 2016, taking into account a lower base recorded in the second half of 2015,” the Hong Kong Retail Management Association said.
A government spokesman noted that despite the drop in year-on-year figures, retail sales improved moderately in the second quarter compared with the first quarter of this year.
At the same time, the city saw a pickup in July visitor numbers. Overall arrivals increased 5.3% over the same period last year, according to Greg So Kam-leung, secretary for commerce and economic development.
He said mounting safety concerns in popular tourist destinations such as Europe and Japan, as well as appreciation of currencies in nearby regions, had helped Hong Kong gain some tourists this month.
